Many boomers will have to stay employed longer than they’d hoped to close the gap between what they’ll need in retirement and what they can realistically afford. Yet the job market is tough for job-hunting older workers, and if they are employed, wages stagnate or decline when people get into their 50s.
A new report by the AARP Public Policy Institute shows the continuing toll on workers ages 45 and older who have suffered a bout of unemployment since the onset of the Great Recession. Lower pay, fewer hours, or more limited benefits in their new jobs and a prolonged inability to find any job are plaguing these workers. AARP found that only half of those hit by job losses have found work, and the rest either remain unemployed or may have given up and dropped out of the labor force entirely.
AARP’s representative survey of some 2,500 older Americans, conducted late last year, aligns with earlier academic studies looking at the Great Recession’s impact on older workers. The youngest boomers are now 50, so the survey includes some people in Generation X.
The following are AARP’s major findings:
Nearly half of the people surveyed earn less in their new employment than they did before losing their previous job. …
Knowing how to budget or invest one’s retirement savings are useful skills. But managing money isn’t just about what you know – it’s also about how you feel.
That’s the gist of a handful of recent studies into a newly identified emotion known as financial anxiety. These early studies look at two things: 1) is financial anxiety real?; and 2) does it explain why people do things like avoiding money issues or going into debt to paper over their financial problems?
The evidence says yes to both questions.
A 2012 study established financial anxiety as an identifiable psychological condition that can be measured using a standard psychological test. The researchers gauged their subjects’ reaction times to pairs of words flashed on a computer screen – negative financial words (debt), positive financial words (jackpot), neutral financial words (bank), or anodyne control words (camp). The subjects were timed on how long it took to identify a word after an on-screen icon replaced one word in the pair.
When only the negative financial word was left on the screen, people with higher financial anxiety were slower to respond than when only the positive word was visible. The prevalence of longer delays for negative words suggests that most subjects had at least some financial anxiety. …Learn More
The “longevity economy” (i.e., aging baby boomers seeking long lives) meets “the quantified self” (tracking everything we do online) in the above video about technologies that help aging boomers stay fit.
The PBS video shows off some of the products being developed to cater to an enormous market of some 100 million Americans over age 50, who are spending about $7 trillion per year. Products include a treadmill desk, technology that reveals sleep patterns, and fitness watches measuring everything from blood pressure to how many steps are walked daily.
One issue not mentioned is the privacy around health matters that boomers sacrifice when their every move and personal health metric is a digital data point stored in the cloud. Younger Americans are comfortable about disclosing their private lives online, but are boomers willing to go this far in the name of health and longevity? Learn More
Americans have been labeled everything from the Greatest Generation to Generations X, Y, and Z. Are you ready for the Centenarian Generation?
The number of 100-years-olds has roughly doubled over the past two decades to more than 67,000 – mostly women – and the U.S. Census Bureau predicts it will double again by 2030. Just think about the implication of living for a century: retirement at, say, 65 means 35 years of leisure.
This is unappealing to some, unaffordable to many, and it impacts us all.
“We’ve added these extra years of life so fast that culture hasn’t had a chance to catch up,” Laura Carstensen, director of Stanford University’s Center on Longevity, said during a panel discussion at a recent Milken Institute Global Conference in Los Angeles. The best use for a additional 20 or 30 years of life isn’t, she said, “just to make old age longer.”
Granted, the Milken panelists – all privileged and accomplished baby boomers – are removed from the financial and other challenges facing most older Americans. But they have thought deeply about longevity and its consequences.
The following is a summary of their musings on how we might adjust to the coming cultural tilt toward aging:
Young people need to be more engaged in the issue of increasing U.S. life expectancy, because it will affect Generation Z far more than it has today’s older population. To engage his son’s interest in the topic, Paul Irving, chairman of the Milken Institute’s Center for the Future of Aging, said he introduced the concept of 80-year marriages. “That started a conversation,” he said. …Learn More
Redlining, subprime mortgages sold in minority and immigrant neighborhoods, higher interest rates on car loans – black Americans have reason to distrust the financial system.
This spills over into their retirement planning, specifically their relationships with financial planners and how much they save, concludes a study in The Journal of Personal Finance. Among the findings is that blacks and, to a lesser extent, Latinos have difficulty trusting planners.
Past research shows trust can play an important role in financial decisions. People who trust the stock market, for example, are more likely to invest in stocks. But black Americans start out with generally lower trust levels: nearly half reported “low trust,” compared with only about one-quarter of whites, according to the survey data used by three finance professors in their study last year.
The researchers then assessed whether trust levels affected two specific behaviors: hiring a financial planner and saving for retirement.
A lack of trust reduced the likelihood an individual will engage a planner by 18 percentage points, compared to individuals who tend to be more trusting. The surprising result was that blacks were actually more likely to hire a financial planner than were whites with similar incomes when the researchers controlled for trust – meaning the controls eliminated differences in behavior related to individual trust levels.
Another finding was that while blacks have less retirement savings than do white Americans of similar incomes, this difference virtually disappears when the analysis controls for the difference in their trust levels.
If black Americans could get past their inherent lack of trust and get good advice or good financial products things might be different, said one of the study’s authors, Terrance Martin, an assistant professor of finance at the University of Texas-Pan American in south Texas.
“You might see less of a difference between black households’ accumulated retirement saving relative to white households,” Martin said.Learn More
These federal government resources should be helpful to Squared Away readers ranging in age from 20 to 70:
Free credit report: Young adults in particular may not be aware they’re entitled to a free credit report from one of the major credit rating agencies. To ensure the report truly is free, click and follow the links to an outside source recommended by the Federal Trade Commission. To file a paper request or ask for a report by telephone, try the federal Consumer Financial Protection Bureau’s website.
New U.S. Social Security Administration blog: The agency started a new blog last month to provide important benefit information under various programs. Here’s a sample of three useful articles on the blog:
The share of college students who must borrow to pay for their education has surged over the past decade. Average borrowing per student is also much higher than it was in 2004, though there’s evidence it might now be in decline.
Only now is serious research trickling in about the personal financial fallout from the nation’s $1 trillion-plus in student debt outstanding. But one new study reaches an interesting conclusion about the burden of student debt: it “is much greater among non-completers than among those who obtain a college degree.” One reason is that they can’t expect to earn the higher income that a degree confers on a graduate.
The study – part of an edited volume published by the W.E. Upjohn Institute for Employment Research, “Student Loans and the Dynamics of Debt” – gauged the debt’s impact on various measures of personal financial stability, including the likelihoods of filing for bankruptcy protection and buying a house.
The researchers first analyzed a broad sample of U.S. households over age 29, controlling for income and other demographic characteristics. They found some negative impact as student debt levels rise, but this effect was “not particularly strong.”
However, there was a large impact on the financial stability of a subgroup of borrowers who had not completed their degrees. The personal finances of these “non-completers,” as the study called them, are “particularly susceptible to being burdened by student debt.”…Learn More
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