July 28, 2022

Most Boomers Don’t Rely Solely on SSA.gov

In 2000, Social Security launched a website allowing retirees to sign up for their benefits online without having to call or visit the agency. By 2013, about half of new retirees were using this feature to file their claims. However, progress stalled after that, despite continued growth in the number of baby boomers who were retiring.

A new survey of 2,600 people between ages 57 and 70 finds that even the people who sign up for their benefits online often wind up contacting Social Security for assistance. In the end, only 37 percent of all retirees claim completely online and never visit a field office or call the agency’s 800 number at some point during that process, suggests research by Jean-Pierre Aubry, a researcher at the Center for Retirement Research.

The boomers who are the most likely to complete the entire application online are college-educated people who are comfortable banking or filing their taxes, according to Aubry’s study. At the same time, older people of color are more hesitant to sign up for their benefits without calling or visiting their local Social Security office.

Given Social Security’s staff shortage and budget constraints, both the agency and retirees would benefit from fewer calls and visits. Fortunately, the share of retirees who apply for benefits exclusively online is likely to increase in the future. It is second nature for young adults – regardless of their race or whether they went to college – who grew up with cell phones in their hands to manage their finances online or buy things. When they start retiring, they will be more at ease than their parents with signing up for benefits without speaking with someone at the agency.

But there are things Social Security could do to increase online activity now. The agency already provides a personalized online statement that details eligibility and benefit levels for workers of all ages who create a my Social Security account. Based on the survey of older workers, Social Security could make it easier to get answers to basic inquiries such as whether an application, once submitted, is being processed. …Learn More

July 26, 2022

Retirement’s a Struggle? Get a Boommate!

Soaring apartment rents and widowed or divorced baby boomers with spare bedrooms and inadequate retirement income – these two trends have conspired to drive up the number of boomers seeking roommates.

New listings being posted by homeowners between January and June on Silvernest, a website where boomers can search for potential roommates, doubled to 2,331 compared with the first six months of 2021, said Riley Gibson, president of Silvernest. Women account for two-thirds of the listings.

The end of the crisis phase of the pandemic and the availability of protective vaccines may have something to do with the recent surge in people being willing to share housing. And with rents up 14 percent in a year, renters – whether boomers or young adults – are looking for affordable options. “We often see [young] people are looking for an exchange for less rent – help around the house,” Riley said.

Millions of retirees still live alone and aren’t willing to let a roommate invade their space. Yet Jennifer Molinsky at Harvard’s Joint Center for Housing Studies estimates that more than 1 million older Americans currently live with non-family members.

Finding a “boommate” has multiple benefits. In this PBS video, what motivated Becky Miller, a retired receptionist, to find a roommate was the need to defray the cost of maintaining her home. But by renting to a fellow boomer, Debra Mears, Miller found more than just financial relief.

By sharing her home, she also found companionship. …Learn More

July 21, 2022

Research to Look at Work, Retiring by Race

The racial disparities embedded in our work, retirement, and government systems will be front and center at the annual meeting of a national research consortium.

One of the presentations at the online meeting on Aug. 4 and 5 will explore the impact of wealth and income inequality on Black and Latinx workers at a time these populations are rapidly aging. The researchers are concerned with how their decisions about when to retire will impact their economic security.

Growing inequality “point[s] to greater risks of financial insecurity” for future Black and Latinx retirees, the researchers said.

Another paper will address a related topic: the differences, by race and ethnicity, in workers’ levels of knowledge about how Social Security benefits work. Understanding the ins and outs of the federal retirement benefit – and specifically the advantages of delaying retirement to get a larger monthly check – are critical to improving living standards in old age.

Other research will explore an area that hasn’t been well studied: government programs used by non-parental caregivers such as Black grandparents or members of Latinx three-generation households to support the children in their care. The researchers will examine minority and low-income workers’ and retirees’ use of SNAP food stamps, child care subsidies, Temporary Assistance for Needy Families, and various benefit programs overseen by Social Security.

COVID is another topic on the agenda. One study compares the financial impact of the pandemic on early retirement for different income groups with the patterns in the aftermath of the Great Recession more than a decade ago. Another study examines how mortality rates might change in the wake of the pandemic.

Research on many other topics will also be featured, including health insurance, mothers, and longevity. The agenda and information about registration are posted online. Registration is free. …Learn More

July 19, 2022

Caregiving’s Toll on Work Happens Quickly

Caregiving often wins out in the struggle between work and fulfilling one’s obligation to a family member or friend who needs help.

Researchers have documented the phenomenon of workers being forced to eventually leave their jobs so they can devote more time to the person in their care. But the impact on the work lives of the people who are new to their caregiving duties is often dramatic and happens very quickly, a new study finds.

Employment levels for workers who become caregivers declined by 6 percent within a year after they started, and most of the drop occurred because they left the labor force entirely, according to the analysis linking Census Bureau surveys on informal care with the Social Security Administration’s employment records for working-age adults.

The decline in employment may occur as early as four months after caregiving starts, based on a second analysis using only the Census data.

Caregivers who decide to stop working are also more likely to go on federal disability – either right away or years later. Many of the people receiving the benefits are older people who, despite their disabilities, had persisted in their jobs. Once they were needed by a family member, they may have decided to apply for disability to offset some of the loss of income from working.

Indeed, the largest employment declines were experienced by people over age 62, who often have an elderly parent or spouse in need of care – and sometimes both. For many of them, leaving a job coincided with claiming their Social Security benefits in an indication that caregiving is often pushing them to retire. Workers between 45 and 61 saw a smaller decline in employment after becoming caregivers.

Men’s and women’s paths from worker to caregiver are different, however. Women report small declines in their employment levels, and they return to the labor force relatively quickly. The impact on men is more dramatic and long-lasting. …Learn More

July 14, 2022

Inflation Takes a Toll on Workers

The headline on a January blog asked, “How Long Can Wages Outrun Inflation?” Now we have our answer.

Inflation is increasing two times faster than private-sector wages, according to the Federal Reserve Bank of St. Louis’s handy website. As of June 1, the Consumer Price Index had surged by 9.1 percent compared with the index at the same time last year. Average wages have risen 4.2 percent over the year.

To slow the economy and bring down inflation, the Federal Reserve is raising interest rates. The silver lining is that Americans are still fully employed – the 3.6 percent jobless rate is back to pre-COVID levels – and have used this leverage to secure the hefty wage hikes.

But workers’ standard of living is eroding because their paychecks can’t keep up with a one-year increase in apartment rents exceeding 10 percent and gas prices that have dropped recently but are still well above last year’s prices. The grocery tab is shocking too. The Bureau of Labor Statistics reports that potato prices are up 16 percent, ground beef up as much as 12 percent, and flour is 40 percent more expensive due to the war in Ukraine, the world’s breadbasket.

Inflation is changing the economy in fundamental ways, and it looks like Americans already exhausted by two-plus years of COVID are in for more tough times. …Learn More

July 12, 2022

Public-Sector Pensions Weathered Pandemic

The economic turmoil in the early months of the pandemic – a plunging stock market and soaring unemployment – posed a real threat to state and local government pension funds and the workers who rely on them.

One group was particularly vulnerable: public-sector workers who aren’t covered by Social Security and lack the backstop of the federal government if their employer pension plans get into trouble.

The Center for Retirement Research has some good news for these 5 million noncovered workers living in 20 states. Their pension plans got through the first two years of the pandemic unscathed.

In dollar terms, government contributions to these defined benefit pension plans actually increased during COVID. That and a roaring stock market in 2021 significantly improved their financial condition. Of course, this sunny report is clouded by what is happening to the stock market now – it has reversed course and dropped 20 percent this year.

But the researchers’ assessment is that COVID was not the financial disaster many had feared for the public-sector workers who aren’t covered by Social Security.

The 59 noncovered plans in the study vary in size from small local pension plans like the Pittsburgh Police Relief and Pension Fund to the nation’s largest state plan, the California Public Employees Retirement System.

Congress’ financial support during COVID played an important role in stabilizing state and local governments’ finances. They received hundreds of billions in pandemic relief from the CARES Act in March 2020 and, a year later, the American Rescue Plan. The federal relief checks to families and businesses also added billions to state and local tax bases. Importantly, tax revenues snapped back after a brief drop in 2020, because high-income workers, who pay more in taxes, didn’t suffer the dramatic layoffs experienced by low-income workers.

The federal support provided the fiscal breathing room for governments to make their pension contributions on schedule. In fact, some of the states with the most poorly funded plans – namely New Jersey and Connecticut – took advantage of the fiscal windfall to make historically large contributions in 2022. …Learn More

July 7, 2022

Imagining the End of The Age of Labor

The tension between technology and work is at least as old as the economics profession itself. A question some people are asking now is: if computers run by artificial intelligence can do the job of humans, will work disappear someday?

Two economists are proposing a couple different scenarios in a new paper that is part science fiction and part mathematical models. In one scenario, lower-paid workers who are not highly valued by society – say, McDonald’s hamburger flippers – are more readily replaced by computers than a scientist searching for a cure for Alzheimer’s disease. This will drive down wages for a larger and larger segment of the lower-paid labor force.

In a second sci-fi scenario, machines run by artificial intelligence, or AI, will ultimately be able to do any worker’s job. In that world, work “would cease to play the central role that it currently plays in our society,” the researchers predict. A computer, they muse, could even stand in for a judge. Farfetched? An AI judge might be superior if it “make[s] more accurate and humane judgments than humans, leaving behind the noise, discrimination and biases that have plagued our justice system.”

There are a host of reasons to doubt work will disappear. The economists who reject this worst-case scenario argue that technology is not job-crushing but job-creating. Machines, they say, free up workers from one type of job but open up new opportunities. Only the nature of work changes. It does not disappear. After World War II, for example, new industrial technologies created jobs that lured farmers into the cities. Artificial intelligence shouldn’t be any different.

The authors of this new paper do concede that what they call the End of Labor is far in the future. Supercomputers capable of the most sophisticated AI are extraordinarily expensive. It seems more plausible that jobs involving simple, repetitive tasks will be the ones increasingly replaced by machines. This has already started happening as robots have moved onto factory floors.

But if workers of all types are eventually replaced by machines, how would they buy their groceries, cell phones, and shoes? Something would have to be done to replace their earnings and “avoid mass misery” and “political instability,” the researchers say. They propose a universal basic income. …Learn More