November 2022

Banks Could be More Retiree Friendly

Anyone who has lived paycheck to paycheck is familiar with the headache of overdraft charges.

Due to a slight miscalculation at the end of a tough month, there isn’t enough money in the account to cover a check. The bank pays the check but charges an overdraft fee that drains money out of the account. A negative balance would trigger an overdraft fee on a different check or cause it to bounce.

Of course people should manage their finances responsibly. But the federal Consumer Financial Protection Bureau (CFPB) argues that older people in particular are at a disadvantage, and perhaps banks should put practices in place that protect them from overdrafts, which the CFPB said produce billions in revenue every year. The agency has also clarified existing regulations to prevent what it calls surprise overdraft fees, including fees charged to customers who write a check that bounces because they deposited someone else’s check that then bounced.

Banks “should promote financial health for older adults rather than erode it,” the agency said. Some institutions have made changes but more could be done. One suggestion: alerting an account holder’s trusted relative or caregiver when a bank balance is dangerously low.

Overdraft fees range from $15 at smaller banks to $35-$37 at major institutions. Some banks limit the fees they charge in a single day to one, but some will charge as many as six a day. “Social Security and a small pension,” a retired steelworker complained to the CFPB, “do not provide extra funds sufficient to pay for any of the cited ‘junk’ fees.”

Retirees’ checking accounts could be handled more carefully for a few different reasons. If they rely heavily on Social Security, they don’t have a big cushion in their checking accounts and must navigate an irregular deposit date for their Social Security checks. …Learn More

How Older Workers Adapt to New Disability

One in four workers who are still healthy in their mid-50s will experience a disability in the next few years that will make working more difficult.

Sometimes the disability stems from a sudden medical problem such as a heart attack, but many disabilities are just the accumulated wear and tear on aging bodies or chronic medical conditions that get worse.

Whatever the cause, a new study in the journal Research on Aging finds that late-life disabilities often force older workers into early retirement. Nearly three-fourths of the workers who experienced a new disability in their late 50s or early 60s had left the labor force before their full retirement age. Among the people who didn’t have a disability, only a third had stopped working.

The researchers also looked more closely at those with disabilities who did continue to work. Were they able to transition into a new job or occupation that might accommodate their condition? Do they earn less?

The answer to both questions seems to be yes.

Linking a long-running survey of older Americans with occupational data, the researchers checked in on the workers who did not have a disability at age 55 to see how they were faring at 59, 63 and 67. Occupational changes were fairly common when they remained in the labor force after developing a disability.

This might mean moving from a physically demanding construction job to Uber driver or from school teacher to editor of educational materials. Finding a job in a different occupation potentially creates a bridge that accommodates the older workers’ desire to keep working and delay retirement.

At age 59, for example, two-thirds of the people with disabilities who stayed in the labor force had switched occupations, compared with less than a third of the other workers. Once a disability sets in, “staying in the same occupation is difficult,” the researchers concluded.

The people who develop a disability sometime after their mid-50s also earn perhaps 15 percent less than those who are disability-free at 67. …Learn More