A Short-lived Retirement

Call it the anti-retirement movement – older Americans who are either resisting the lure of retirement or have eagerly exited a short-lived retirement to return to work.

Squared Away tracked down three people who fit the profile of the type of people research has shown are most likely to keep working into their mid-60s, 70s, or even their 80s: college-educated go-getters who find unlimited travel or golf a tad boring. To be sure, these are the lucky Americans who have financial and other advantages that many older people lack. The extra money they receive from working, even if it’s part-time, isn’t their primary motivation, though it’s nice to have. And age has given them the luxury of crafting their own work schedules, which also allow them to enjoy their families or philanthropy.

Two of these older Americans – Roger Parker, a retired minister (the second musician from right in photo above), and Deborah Hope, a financial industry veteran – are profiled below. One more profile will appear in Thursday’s blog.

Roger Parker
During Roger Parker’s long career as a United Methodist minister, what never got the attention it deserved was one of his lifelong passions: playing jazz standards on the piano – “Quiet Nights of Quiet Stars,” “Take the A Train,” “Satin Doll,” “Ain’t Misbehavin’,” and “The Girl from Ipanema.”

Parker retired from full-time work at his church in Franklin, Tennessee, outside Nashville, after years of saving and preparation for a retirement funded by his church pension and 401(k) account. He signed up for weekly music lessons that got him in shape to join two local jazz groups: Wingtip, which occasionally picks up a paid gig, and Chesser Cats, which performs more frequently – and for free – at local nursing homes. …Learn More

Graduates wondering about their finances

Graduates Struggle for Autonomy

If buying a house or having children were once hallmarks of being a grown-up, something more basic marks a successful transition to adulthood today: financial self-sufficiency.

Only half of more than 1,000 freshmen who entered the University of Arizona in 2007 and were tracked over time by researchers Joyce Serido and Soyeon Shim were employed full-time in 2013.  And only half of these full-time workers, ranging in age from 23 to 26 years old, supported themselves without help from family members.

These young adults, mostly graduated, overwhelmingly said that achieving financial independence was critical, according to Serido and Shim’s new report, “Life After College: Drivers for Young Adult Success.” But achieving independence has been difficult due to unprecedented borrowing for college and a post-Great Recession job market that’s been described as “bleak” for young adults.

While the economy certainly poses hurdles, the report concludes that too many young adults fail to take responsibility for their personal finances.  Recent graduates were grouped into three levels of financial behavior: high-functioning, rebounding, and struggling.   Which one is you or your child? …Learn More

Millennials and Money: Women Trail Men

Millennial women may have higher expectations about their financial prospects than their baby-boomer mothers.

But Millennial women, just like their mothers, are earning less than their male counterparts and saving less for retirement.

The vast majority of single and married men and women, ages 22 through 33, said they recognize the need to save, whether as a defense against economic uncertainty or in response to the onus on each U.S. worker to prepare for his or her own retirement.

A major reason cited for not saving is “not having enough money to save right now.”  This is especially germane for women: for example, the median annual income for Millennial women is $45,000, while their male counterparts earn $61,000.

Women, on the other hand, would make wiser choices about what they’d do with a $5,000 windfall: they’d be less likely than men to spend the windfall and more likely to save it or use it to pay down debt.

Harris Poll conducted the nationally representative online survey of 1,600 Millennial households for Wells Fargo. In addition to single Millennials, married and single mothers were also surveyed, and child-rearing responsibilities likely reduced the incomes reported by women.

Nevertheless, Millennial women trail their male peers in five financial benchmarks shown below:

Learn More

Retiree Health Plans Considered

Retiree health benefits are a luxury item.

In 2013, just 28 percent of government and private-sector employers with more than 200 employees offered health benefits to their retiring workers, down from 66 percent in 1988, according to the Kaiser Family Foundation.

Bar chart showing large firms who offer retiree health benefitsThese plans are popular with workers, but their declining prevalence has a silver lining.

A long history of research shows that people who can retain their employer health benefits if they retire tend to retire earlier, confident they’ll be insulated from extraordinary medical expenses that could wipe out their savings.

Here’s the silver lining when retirees lose that coverage: by inducing them to remain in the labor force longer, perhaps until their Medicare starts, it improves their retirement security in other ways. …Learn More

1 in 3 Late in Paying Student Debt

About one in three Americans trying to pay down their student loans is 90 days or more late on their payments, according to a new report by the Federal Reserve Bank of New York.

This is up sharply from a decade ago, when one in five people in repayment was that far behind.

The Federal Reserve estimates that 31% was the “effective” delinquency rate in 2012; it applies only to people who have actively been in repayment. The bank said this rate is a more accurate measure of the problem than the widely reported rate for 90-day delinquencies – 17 percent – which includes all borrowers, including current students and those who’ve been granted some type of loan payment deferral.

The report, “Measuring Student Debt and Its Performance,” provides more evidence that college debt is a major financial burden for a growing numbers of Americans. Between 2004 and 2012, the number of people borrowing for college has nearly doubled to about 39 million, and the total debt outstanding has nearly tripled to $1 trillion and now exceeds the nation’s credit card debt.

Delinquencies, by any measure, are higher for student debt than for any other type of U.S. consumer debt, including credit cards. The pace of delinquencies is also accelerating, according to the Federal Reserve.

Other trends highlighted in its report include: …Learn More

Medicare Advantage Enrollment Doubles

Enrollment in the Medicare Advantage plans that private insurers offer as an alternative to traditional Medicare coverage has more than doubled over the past decade, the Kaiser Foundation reports.

The share of the Medicare population enrolled in these private plans is 30 percent, up from 13 percent in 2005, the non-profit foundation said.

The reason for this dramatic growth: Medicare Advantage became a better deal for older Americans in the wake of a 2003 increase in federal subsidies to insurance companies offering the plans.

The federal government subsidizes insurers through its reimbursements for the care they cover for older Americans enrolled in Medicare Advantage. Those payments were increased in 2003. Insurers responded by reducing beneficiaries’ copayments and cost-sharing in the plans and by providing medical services not always available to people who enroll directly in Medicare and purchase Medigap policies, said Gretchen Jacobson, an associate director of Kaiser’s Medicare policy program.

The extra services include gym memberships, eye glasses, dental care, and preventive medical care. To rein in their overall medical costs, Medicare Advantage plans restrict the hospitals and doctors that patients can use. …Learn More

Cross roads image between work and retirement

Half Say Retirement Saving Is Top Goal

Half of all American adults view their top financial goal as making sure they have enough money to retire, finds a survey conducted in early April and released last week by the National Endowment for Financial Education (NEFE).

That’s barely changed from 47 percent who said so in NEFE’s 2011 survey. These figures are unimpressive if one considers that most everyone eventually retires. Further, fewer than one in five U.S. workers has the luxury of a traditional defined benefit plan that will send them a pension check every month.

Saving for retirement hasn’t gotten any easier either: two of three adults in the NEFE survey identified an inability to save enough as a major financial obstacle. That sentiment may be one reason why only about half of private-sector U.S. workers participate in a retirement savings plan at work. …Learn More

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