September 29, 2022
Healthcare’s Big Bite Out of Retiree Budgets
This year, retirees were jolted by the 14.5 percent hike in Medicare’s Part B premium for medical services. It was the second-largest percentage increase in at least 20 years.
The monthly premium, which rose to $170, will drop to $165 in 2023. But medical care is an expensive proposition that consumes a big chunk of many retirees’ income from Social Security, 401(k)s, and other sources.
According to a new analysis of 2018 health care data, typical retirees had 88 percent of their total income left to buy everything else after paying for medical care. And one in 10 retirees with inordinately large health care costs had 63 percent or less left over for living expenses, said Melissa McInerney, Matthew Rutledge, and Sara Ellen King in their study for the Center for Retirement Research.
Interestingly, Medicare does protect against the larger cost burdens that follow health declines. As retirees age or develop chronic physical or medical conditions, the researchers found, the share of income consumed by medical costs doesn’t change very much.
Medicare covers virtually all retirees, and the lion’s share of their out-of-pocket medical expenses are premiums – for Part B, Part D drug coverage, Medigap, or Medicare Advantage insurance plans. The other medical expenses included in this study were cost-sharing and copayments for basic Medicare, prescription drugs, eyeglasses, hearing aids, and visits to the doctor, dentist, and hospital. Long-term care costs were excluded.
The analysis was restricted to people who have signed up for both Medicare and Social Security.
Paying for care puts the most strain on low-income Americans, many of whom rely almost exclusively on Social Security and have few, if any, other income sources. The exception is people with such low incomes that they qualify for Medicaid; they pay only 4 percent of their income for health care. …Learn More
September 27, 2022
Good News on Health Insurance in Pandemic
To paraphrase a U.S. senator in 1977, the moral test of government is how it treats the sick, the poor, and its children. That rings especially true during an historic public health emergency like COVID.
Congress came through with financial relief to blunt the pandemic’s impact, and the money that flowed through the economy provided more Americans with health insurance, while also reducing poverty.
Several newly released U.S. Census reports “show how much vigorous policies can do to prevent poverty and preserve access to health care,” the Center on Budget and Policy Priorities concluded.
The Uninsured. During the pandemic, the share of all adults lacking health insurance declined from 9.2% in 2019 to 8.6% in 2021, reversing the trend of a rising uninsured rate in prior years. The rate dropped as Congress improved access and affordability during COVID by passing large premium reductions for policies purchased on the federal and state exchanges and by requiring states that receive Medicaid funds to expand their coverage of poor and low-income workers during the pandemic.
Congress has extended the premium reductions through 2025, but the federal enhancements to Medicaid are set to expire, leaving states to determine the extent to which they will cover their low-income workers in the future.
The Poor. The COVID aid passed by Congress lifted nearly 14 million Americans out of poverty over the past two years, according to Census. This statistic aligns with earlier research showing the financial assistance was particularly effective in helping low-income workers and people who were struggling financially prior to the pandemic. …Learn More
September 22, 2022
Need for Low-Cost Retiree Housing is Urgent
San Francisco is caught in the vortex of two powerful forces: a fast-growing retiree population and rising rents.
Residents over 60 are expected to make up a fourth of the city’s residents by 2030, according to this video project for The San Francisco Standard by Chris Chang, a student in the University of California, Berkeley’s graduate journalism school.
And San Francisco rents, after collapsing during the pandemic as people left the city, are on the rise again. A one-bedroom apartment is going for $3,100 per month – second only to New York City – despite a rent control policy that limits annual rent increases.
A San Francisco retiree with an unusually onerous rent burden is Shao Yan-Zhen, whom Chang interviewed for the video. The rent soaks up nearly 70 percent of her and her husband’s modest retirement monthly income. They have been on a waiting list for a federally subsidized apartment for two decades and are among the two-thirds of retirees nationwide who qualify for the assistance but can’t get it due largely to a shortage of rental housing. …Learn More
September 20, 2022
Older and Self-Employed – a Satisfied Group
The transition to retirement can take many paths.
A couple years ago, Joelle Abramowitz at the University of Michigan described three groups of self-employed workers over 50. The bulk of them work independently, either as independent contractors or doing odd jobs, and are more often minorities, with very low pay and few employee benefits. Think Uber driver. The other two groups are business managers and business owners, who are predominantly white, male and in good financial shape.
In a follow-up to her earlier research, Abramowitz dug into 24 years of data to understand the self-employed older workers’ attitudes toward work and the transition to retirement. She found a heterogeneous group with a range of views about whether they are transitioning at all.
The independent contractors and workers stand out for being more likely to describe themselves as “partially retired.” Although they are self-employed, they apparently have their eyes on retiring. In addition to gig workers, they might be a caregiver, a stylist in someone else’s salon, or someone who drives people to the airport for a chauffeur company.
These workers have started their current jobs more recently than the owners and managers and say the work itself is not particularly stressful, which could indicate one of two things – that the job is less challenging than their past work or that its main purpose is just to generate extra income to bridge the financial gap to full retirement.
The owners and managers are much less likely to consider themselves in any stage of being retired, even though their roles may be changing. Their level of engagement reflects that. They usually work 30 to 40 hours and feel more stressed than the independent self-employed workers or older employees who are still on a company payroll. …Learn More
September 15, 2022
The Bridge to a Larger Social Security Check
Retirees who postpone collecting Social Security from age 62 to 66 – the full retirement age for most baby boomers – get around a third more in their monthly checks. Delaying to 70 increases it even more.
There’s one problem with this strategy. Many people want to retire well before they turn 66.
But there is an alternative for people with 401(k) savings: retire but don’t sign up for Social Security and withdraw an amount from the 401(k) equivalent to the Social Security check. Then delay Social Security for a few years. The start date will, of course, depend on how much money is in savings and how much of it the retiree can spend comfortably.
In a recent experiment, this idea appealed to a substantial minority of older workers who were made aware they could create this so-called “bridge” to a larger Social Security check.
The researchers randomly assigned the workers – all between 50 and 65 – to one of four groups. Each group was presented with the same choice of whether to use the bridge strategy but the choice was described differently. Regardless of the description, the share of participants willing to consider the strategy fell within a range of 27 percent to 35 percent.
This level of interest is “noteworthy,” given that “the survey is likely the first time the respondents would have encountered the idea of drawing down their 401(k)s to postpone claiming Social Security,” said the researchers at the Center for Retirement Research. …Learn More
September 13, 2022
How Disabilities are Tied to Food Insecurity
People with disabilities have high rates of food insecurity because they earn less or can’t work at all. Add to that their unusually large expenses for health care and assistive equipment like wheelchairs and special computers.
But the roots of food insecurity run deeper than just the financial constraints. Even middle-income people with disabilities are more food insecure, which the USDA defines as either deficiencies in nutrition or not having enough to eat.
Part of the problem is where they tend to live, according to a new Urban Institute study. Counties with unusually large disability populations have fewer places to shop for groceries and an oversupply of fast food restaurants, convenience stores, and small grocery stores with limited shelf space. Snack foods and sweet beverages are abundant in these establishments but the selection of fruits, vegetables and lean meats is limited.
A shortage of stores that sell healthy food is a bigger problem in the cities with the highest disability rates than in similar rural areas, the researchers found. But food deserts – a shortage of options for grocery shopping – are more concentrated in the less populated Southeast and Appalachia, as well as rural pockets in Maine, Michigan and New Mexico. The researchers used two sources of disability data: general disability rates in the U.S. Census, as well as data on people with disabilities severe enough to qualify them for Social Security benefits.
Two rural municipalities dramatically illustrate the difference in access to food establishments between areas with high and low disability rates. One in four residents reported having a disability in Hickman, a city tucked into the southwestern corner of Kentucky. But Hickman has fewer than three establishments that sell food for each 1,000 residents.
At the other extreme, Billings, Montana’s disability rate is half that of Hickman’s and there are 13 food establishments per 1,000 residents. …Learn More
September 8, 2022
Keeping Your Cool in Salary Negotiations
One big problem people have when negotiating for a job or a raise is that they get in their own way. Negotiating unleashes a brew of emotions – fear of rejection, a lack of confidence, doubts – that can sabotage them. The British have coined a word for this type of anxiety: collywobbles.
Moshe Cohen, author of “Collywobbles: How to Negotiate When Negotiations Make You Nervous,” consults with companies and individuals on leadership and negotiation strategies. But his idea for the book came out of the graduate classes on negotiation he teaches at Boston University. Cohen realized that even when students are fully prepared for a negotiation, they will choke in the moment. He agreed to share some of his insights in the book, which examines negotiating from the perspective of someone who has anxiety. He recently published his second book inspired by the pandemic lockdown: “Optimism is a Choice and Other Timeless Ideas.”
What are collywobbles and how do they manifest in salary negotiations?
Collywobbles is a British term that means butterflies in your stomach. And people get nervous when they go to negotiate. I wrote “Collywobbles” for a student who works full-time and negotiates every day for her boss but can’t negotiate with her boss because she gets too nervous. She works really hard and never gets that raise or promotion because she never asks for it. The question I answer in my book is: how does she overcome that?
Are women worse negotiators than men and why?
Yes, for two reasons. One is socialization. Generally, I think women are brought up to be more aware of and care about relationships, and they fear that if they advocate for themselves they’re going to damage relationships. Men are socialized to be much more oblivious to those things and freer to ask for things. Men will do things that might damage the relationship but aren’t aware they’re doing it.
The second thing is society’s expectations. If women are strong self-advocates, very often there’s a backlash and they get punished for it in ways that men don’t. If I, as a man, am pushy at my job, I’m seen as a go-getter. If you’re pushy, you’re seen as a bitch. The combination of how society socializes women and how it responds to women is a really intimidating factor.
How about people of color?
I’m certainly not an expert on that but here’s what I’ve observed. One exercise I give my students is that they have to go out and ask for stuff until 10 people say no. They can go to stores and ask for discounts – anything. An African student came to me and said, “How can I ask for a discount when the second I walk into a store employees start following me around?” Once again, context is important. Do people negotiate differently when they’re in a context where they feel comfortable and less likely to incur a backlash? African students negotiate very differently here than they do in Africa where they may have a societal status that entitles them to ask for more. When they’re in this country, they’re just seen as a minority. …