July 2019

Photo of an older white man

Why are White Americans’ Deaths Rising?

Rarely does academic research make a splash with the general public like this did. A grim 2015 study, prominently displayed in The New York Times, showed death rates increasing among middle-aged white Americans and blamed so-called “deaths of despair” like opioid addiction, suicide, and liver disease.

Rising mortality, especially for white people with low levels of education, ran counter to the falling death rates the researchers found for Hispanic and black Americans. The husband and wife team who did the study proposed that “economic insecurity” might be an avenue for research into the root cause of white Americans’ deaths of despair.

A 2018 study took up where they left off and found a connection between economic conditions and some types of deaths. Researchers from the University of Michigan, Claremont Graduate University, and the Urban Institute said poor economic conditions – in the form of local employment losses – have played a role in the rising deaths since 1990 from chronic health problems like cardiovascular disease, particularly among 45 to 54 year olds with a high school education or less. However, they could not establish a connection to the rise in deaths of despair.

In a 2019 study in the Journal of Health and Social Behavior, these same researchers instead focused on what is driving the growing educational disparity in life expectancy trends among whites: life expectancy is rising for those with more education but stagnating or falling for less-educated whites.

As for the health reasons behind this, they found that chronic conditions like cardiovascular disease and even cancer are critical to explaining less-educated whites’ life expectancy, and they warned against putting too much emphasis on deaths of despair. In the medical literature, they noted, cardiovascular disease, and some cancers are consistently linked to the “wear and tear” on the body’s systems due to the stress that disadvantaged Americans experience over decades, because they earn less and face adversities ranging from a lack of opportunities and inadequate medical care to substandard living environments. …Learn More

Photo of Chapter 7 form

1 of 3 in Bankruptcy Have College Debt

One thing bankruptcy won’t fix is college debt, which – in contrast to credit cards – can’t usually be discharged by the courts.

One in three low-income people who have filed for bankruptcy protection from their creditors have student loans and face this predicament, according to LendEdu, a financial website.

The debt relief they can get from the courts is very limited, because the aggregate value of their non-dischargeable college loans is almost equal in value to all of their other debts combined, including credit cards, medical bills, and car loans.

Under these circumstances, a bankruptcy filing “does not sound like a financial restart,” said Mike Brown, a LendEdu blogger.

Although LendEdu analyzed data for low-income bankruptcy filers, the court’s inflexibility around student loans affects a wider swath of college-educated bankruptcy filers.

In the past, individuals were permitted to use bankruptcy to reduce their college loans. But in 1998, Congress eliminated that option unless borrowers could show they were under “undue hardship,” a legal standard that is notoriously difficult to satisfy.

While the legal requirement hasn’t changed since 1998, paying for college has become far more onerous. Americans today owe nearly $1.6 trillion in student debt, which ranks second only to outstanding mortgages. …Learn More

Expect Widows’ Poverty to Keep Falling

Line chart showing poverty rates for widows and married womenThe poverty rate for widows has gone down over the past 20 years. This trend will probably continue for the foreseeable future.

Women face the risk of slipping into poverty when a husband’s death triggers a drop in retirement income from Social Security and a pension (if he had one). But beginning in the 1970s and 1980s, women moved into the nation’s workplaces at an unprecedented pace.

Women now make up nearly half of the labor force and are more educated, which means better jobs – and better odds of having their own employer retirement plan.  As a result, they have become increasingly financially independent.

This trend of greater independence is now showing up among older women. Widows between ages 65 and 85 put in 10 more years of work than their mother’s generation, which has helped push down the poverty rate from 20 percent in 1994 to 13 percent in 2014, according to the Center for Retirement Research. …Learn More

Photo of tornado damage in Beavercreek, OH

Why Americans Can’t Come Up with $400

In Beavercreek, Ohio, the cleanup from a recent tornado has begun. But debris is still piled high on many residents’ lawns.

“What we’re seeing following this tornado is people not having enough cash to pay upfront for house debris removal even though insurance companies will reimburse them,” former mayor Brian Jarvis said on Twitter. The debris cleanup comes on top of other costs like temporary housing in this city east of Dayton.

Much was made recently of a survey in which four of every 10 American families said they could not cover an unexpected $400 expense. But no one explained why. New research has some answers.

Even when people have $400 in their checking or savings accounts, they don’t always feel like they have the money to spend. That’s because they may have already committed the funds to paying off their credit cards, according to an analysis by Anqi Chen at the Center for Retirement Research.

This problem isn’t confined to low- and middle-income people either: 17 percent of households earning more than $100,000 would have to scramble to find the extra $400.

The study uncovered what cash-strapped families have in common. …Learn More

Washington, DC skyline

Spotlight on Our Research, Aug. 1-2

Topics for this year’s Retirement and Disability Research Consortium meeting include the opioid crisis, retirement wealth inequality over several decades, trends in Social Security’s disability program, and the impacts of payday loans, college debt, and mortgages on household finances.

Researchers from around the country will present their findings at the annual meeting in Washington, D.C. Anyone with an interest in retirement and disability policy is welcome. Registration will be open through Monday, July 29. For those unable to attend, the event will be live-streamed. The agenda lists all of the studies.

Here are a few:

  • Why are 401(k)/IRA Balances Substantially Below Potential?
  • The Impacts of Payday Loan Use on the Financial Well-being of OASDI and SSI Beneficiaries
  • The Causes and Consequences of State Variation in Healthcare Spending for Individuals with Disabilities
  • Forecasting Survival by Socioeconomic Status and Implications for Social Security Benefits
  • What is the Extent of Opioid Use among Disability Applicants? …

Learn More

Video: Retirement Prep 101

Half of the workers who have an employer retirement plan haven’t saved enough to ensure they can retire comfortably.

This 17-minute video might be just the ticket for them.

Kevin Bracker, a finance professor at Pittsburg State University in Kansas, presents a solid retirement strategy to workers with limited resources who need to get smart about saving and investing.

While not exactly a lively speaker, Bracker explains the most important concepts clearly – why starting to save early is important, why index funds are often better than actively managed investments, the difference between Roth and traditional IRAs, etc.

Bar graph showing percentage of workers without a 401kSome of his figures are somewhat different than the data generated by the Center for Retirement Research, which sponsors this blog. But both agree on this: the retirement outlook is worrisome.

The Center estimates that the typical baby boomer household who has an employer 401(k) and is approaching retirement age has only $135,000 in its 401(k)s and IRAs combined. That translates to about $600 a month in retirement.

Future generations who follow Bracker’s basic rules should be better off when they get old. …Learn More

Screenshot of SS statement

Social Security Statement Has Impact

When a Social Security statement comes in the mail, most people do not, as one might suspect, throw it on the pile of envelopes. They actually open it up and read it.

But are they absorbing the statements’ detailed estimates of how much money they’ll get from Social Security? RAND researcher Philip Armour tested this and found that the statement does, in fact, prompt people to stop and think about retirement: workers said their behavior and perceptions of the program changed after seeing the statement of their benefits.

The study was made possible after Social Security introduced a new system for mailing out statements. Workers used to get them in the mail every year. In 2011, the government took a hiatus and stopped sending them out. The mailings resumed in 2014 – but now they go out only before every fifth birthday (ages 25, 30, 35 etc.).

Armour was able to use the infrequent mailings to compare the reactions of the workers who had received a statement with those who had not during a four-year period, 2013-2017.

The statements bolstered their confidence that they could count on Social Security when they retire. More important, receiving them in the mail spurred some people to work more. To be clear, this is what they said – it isn’t known what they actually did.

Those who had been out of the labor market were much more likely, after getting a statement, to say they had returned to work. Working people under age 50 increased their hours of work.

Social Security benefits, on their own, usually are not enough to live on in retirement, and half of U.S. working-age households are at risk of falling short in retirement. But unfortunately, the study wasn’t able to detect another critical aspect of their retirement preparation: saving. …Learn More