Author Archives: amy

Know the Social Security Survivor Benefit

My divorced aunt did not work while she was raising eight children. After her former husband died, she was pleasantly surprised to learn she could start collecting his Social Security.

She has a lot of company. Nearly two out of three men and women in a new survey by RAND were unaware of this rule: a divorced person who was married for at least 10 years is entitled to the deceased spouses’s survivor benefit. In fact, she would even get the benefit if he remarried.

In the case of couples who were still married when the spouse died, the marriage had to last only nine months for the survivor to get the benefit. Fewer than half of the people surveyed by the RAND researchers were aware of this rule.

The responses were no more impressive for some of the other questions about Social Security’s survivor benefit. This benefit is based on the higher-earning spouse’s work record – typically the husband. Even a wife who used to work and is collecting Social Security based on her work record is eligible to switch to her husband’s benefit after he dies – if his check is larger than hers.

To make the switch in this particular case, the widow must file with the Social Security Administration either online or at a local office. (However, if the wife never worked and is at retirement age, she will automatically start receiving her late-husband’s check.)

Unmarried partners sometimes operate under a misconception too: three out of four think, incorrectly, either that unmarried people can get the survivor benefit, or they don’t know.

One thing to note about this study is that Americans of all ages were surveyed, and it is not surprising that young adults would have little knowledge of program benefits intended for widows.  But age doesn’t seem to bring wisdom: the results were equally dismal in a similar earlier survey of individuals who were at least 50 years old.

April is National Social Security Month. Couples should celebrate by learning more about how Social Security works – it’s critical to a widow’s standard of living. …Learn More

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Dementia is a Threat to Managing Money

The perils of aging generally escalate around 75, and they are becoming more pervasive as more Americans live to very old ages.

One of these perils – declining cognitive ability – often creates financial problems. A new study that summarized the research on this side of the retirement equation identified the financial fallout from dementia.

Currently, dementia afflicts roughly a quarter of seniors in their early 80s. And geriatricians and demographers have predicted for years that dementia will become a serious societal problem in the future as the tsunami of baby boomers reach older ages.

The first sign of deteriorating financial skills might be forgetting to pay a bill. But when severe dementia sets in, the vast majority completely lose their ability to manage their finances and risk making big mistakes, such as losing money in a fraudulent investment scheme.

Another concern is retirees’ growing reliance on 401(k)s for more of their income. Increasingly, they are grappling with the complicated question of how much money to withdraw each year from their 401(k) accounts – this is difficult for anyone but virtually impossible for people with dementia.

Fortunately, most of them get assistance managing their finances. But the seniors who don’t get help face potentially grave repercussions, such as having difficulty affording food, housing and medical care.

Managing money is not the only financial risk posed by dementia. A more serious issue is the potential need for a lengthy stay in a nursing home, which will be addressed in a future blog post. …Learn More

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Retirement Saving – Latinos Get an App

Amid a growing awareness that many Americans aren’t properly prepared for retirement, various efforts have ramped up to push the non-savers to save.

A notable initiative is occurring in state government. California, Illinois, and Oregon have started IRA savings programs that require private employers to offer the state-sponsored IRAs to workers if the company doesn’t already have a 401(k).

Picture of the appCell phone apps are also popping up to make saving easier. One such app – Finhabits – is being marketed directly to Latinos, who financial experts say are particularly unprepared for retirement. Two out of three Latino workers aren’t saving in a retirement plan, often because they work in low-wage restaurant and hotel jobs that don’t offer one.

The Finhabits app offers both traditional and Roth IRAs, which can also be set up online. The IRA regularly deducts an amount, designated by the customer, from his bank account and invests the money in low-cost exchange-traded index funds managed by Vanguard or BlackRock.

Carlos A. Garcia created the app – in English and Spanish – to confront a barrier to saving that he experienced in his own family as a child growing up in the border towns of El Paso, Texas, and Juarez, Mexico.  Saving “is not part of [Latino] culture,” he said. “Everybody’s working so hard. But you never talk about retirement.”

He carried this sentiment into his first job at Merrill Lynch after college graduation. He turned down the 401(k) option, because “I had no clue what a 401(k) was.”

This blog doesn’t recommend financial products, and Finhabits has advantages and disadvantages over competing apps. The app’s management fee is slightly higher than some, according to expert reviews. Nevertheless, Finhabits follows sound principles, such as investing in low-cost index funds. The Washington state government chose Finhabits as one of its vendors to provide a retirement plan through the state’s Retirement Marketplace for small businesses. …Learn More

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Doctor: Why Medical Costs Keep Going Up

“We are rapidly approaching the point where we will simply be unable to afford medical care,” says Dr. Edward Hoffer. This is no exaggeration, according to the Henry J. Kaiser Family Foundation: health insurance deductibles and copayments are rising so fast that a significant share of working families have great difficulty paying for their care.

“We as a society have to decide whether healthcare is a right or a privilege,” Dr. Hoffer said. “I happen to think it’s a right. We can’t all drive a Mercedes but every American deserves to have access to healthcare.”

His book, “Prescription for Bankruptcy,” provides his insider’s view of why healthcare costs keep going up. For 46 years, he has worked in Massachusetts as a cardiologist, public health official, and hospital and private practice administrator.

Dr. Edward Hoffer

Question: How do U.S. medical costs compare with other countries?

Dr. Hoffer: The U.S. spends roughly twice as much per capita on healthcare as most other countries. Switzerland is nowhere near us, and they’re more expensive than the rest of Europe. Canada, Germany, France – they all have excellent healthcare systems and spend about half per capita what we do.

Q: What does this have to do with patient care?

A family policy costs the employer roughly $20,000 per employee per year, and many employers have been reacting by increasing employees’ deductibles and copays.  If you’re the line worker who’s making $50,000 and you’re faced with a $5,000 deductible, you behave like somebody who doesn’t have insurance. You skip your preventive care or you avoid a medication because all of this comes out of your pocket. Women are deciding not to get a mammography or someone who has a colonoscopy recommended to them looks at the prices and says, ‘Maybe I’ll put it off.’

Q: You criticize high pay for hospital administrators. You once visited a Boston hospital CEO whose office was so large that you “could barely see him at the far end.” But aren’t administrators crucial to the system?Learn More

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Retirees Ration or Forgo Dental Care

In April, Trudy Schuett will have a procedure to save a tooth, which she estimates a dentist would charge $3,000 to $5,000 to do.

But Schuett, who lacks dental insurance, will pay about $1,000, because the procedure will be performed by dental students at Midwestern University Clinics in Glendale, Arizona. Her cleanings at the school are affordable too.

Regular clinic visits have saved “buckets of money,” she said.

She is one of those resourceful retirees who always finds a way. But two out of three people over 65 do not have dental insurance, according to the Henry J. Kaiser Foundation, often because they lose the coverage when they leave their employer. Medicare does not pay for routine dental expenses, though it sometimes covers care for medical procedures considered integral to a retiree’s health, such as jaw reconstruction or heart surgery; some Medicare Advantage plans offer dental insurance.

Bar graph showing percentage of people over 65 who haven't seen a dentist in at least a yearBut retirees who lack dental insurance are often forced to forgo care or limit their visits to the dentist. Half of seniors haven’t been to a dentist in over a year, Kaiser said. When they do see a dentist, they spend an average $922 out of pocket. For the half of Medicare beneficiaries trying to live on $26,200 or less, dental care consumes, at minimum, 3.5 percent of their income.

Poor dental care also causes health problems. Dry mouth, a side effect of some medications, can cause teeth to loosen or fall out. Tooth loss makes it more difficult to eat. For a variety of reasons, 15 percent of retirees have lost all of their natural teeth – in West Virginia, a low-income state, 30 percent of retirees have no teeth, Kaiser said.

Schuett, who is 67, is working five hours a week for extra income, but she would rather not spend it on expensive dental care. By saving money at the university clinic, she gets to “blow some cash on the grandkids.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.Learn More

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Graduates’ Pay Ranked for 1,650 Colleges

Decisions about which college to attend or degree to pursue are increasingly driven at least in part by this consideration: will I be able to pay back my student loans?

Countless things determine how much someone earns – smarts, rich or poor parents, high school or graduate degree, being in the right place at the right time. But LendEdu’s new ranking of starting salaries for graduates with bachelor’s degrees from some 1,650 U.S. colleges is essential information, especially when debt is the only option to finance college.

A degree is almost always worth the investment. Georgetown University estimates workers with a bachelor’s degree earn $1 million more over their lifetime than high school graduates. Post-secondary degrees have even bigger payoffs.

The salary rankings turned up some useful and quirky findings. LendEdu, a personal finance website for consumers that sells advertising to financial firms, compiled the salary data for the first five years of employment from payscale.com surveys.

  • Ever hear of Harvey Mudd College? The typical recent graduate of this engineering school 40 miles west of Los Angeles earns a bit more ($85,600) than an MIT graduate ($83,600). Harvey Mudd is Silicon Valley’s No. 2 feeder school.
  • Graduates overestimate what a degree is worth. The typical college student expects to earn $60,000 but earns only $48,400 in the work world. …

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Books: Where the Elderly Find Happiness

Women Rowing North Coming of Age Happiness is a Choice

Aging is not, as the cliché goes, for the faint of heart. If a woman makes it to 65, she can expect to live at least 20 more years. Three new books written by or about the elderly provide a wonderful roadmap to aging with grace, introspection, gratitude, and humor.

“Coming of Age: My Journey to the Eighties” by Madeleine May Kunin

The former Vermont governor and ambassador to Switzerland has authored books about politics, feminism, and women as leaders. In her new memoir, she has blossomed into an essayist and poet. Kunin, who is 85, muses about defying “death’s black raven” on her shoulder. The color red is one way to achieve this. She bought a Barcelona Red Prius (easier to find in the parking lot), and then she and her late husband, John, purchased two oversized red armchairs. “I wanted to bring life inside – not leave it outdoors. And the red chairs did exactly that,” she says.

In her poem, “I Loved You When You Did the Dishes,” she writes tenderly of John – first as a robust partner, then as a dependent, and always as “the man of my dreams.” Old age has given her permission to let down her guard, which she did not do as a public figure. Now she discloses private matters like thinning skin and her pain when, as a young legislator in the 1970s, male colleagues didn’t take her seriously. But she invariably looks back on her life with humor. Kunin tells one anecdote about ducking into a men’s bathroom to avoid the long line for the women’s room. A man who recognized her immediately said, “I never thought I’d meet the governor here.”

“Women Rowing North: Navigating Life’s Currents and Flourishing as We Age” by Mary Pipher

Early in her book, Pipher borrows a novelist’s words: “Old age transfigures or fossilizes.” Pipher, who is a psychologist, urges women to aim for transformation or “willing ourselves into a good new place.” The most important thing, she says, is to keep moving along, upriver – memory loss, muscle loss, and stereotypes be damned! Each chapter is a roadmap to that good place: Understanding Ourselves. Making Intentional Choices. Building a Good Day. Creating Community. Anchoring in Gratitude. In the chapter Crafting Resplendent Narratives, she advises readers dealing with difficult situations to “honor our pain and move toward something joyful.” …Learn More

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