April 9, 2019
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).
Cell 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
March 19, 2019
Boomers Cope with Real Financial Pain
We really appreciate readers opening up about their personal experiences in the comments section at the end of each blog. It’s important to stop occasionally and listen to what they have to say.
Aging readers reacted strongly to blog posts in recent weeks about two of the biggest challenges they face: spiraling prescription drug costs and a so-so job market for older workers who aren’t ready to retire.
Here are summaries of their comments on each article:
High Drug Prices Erode Part D Coverage
Readers expressed anger about rising prescription drug prices in response to a blog featuring a diabetic in Arizona who, despite having a Medicare Part D plan, spends thousands of dollars a year for her insulin. She resorts occasionally to buying surplus supplies on eBay from private individuals.
Dr. Edward Hoffer in Boston responded that Americans pay five times more for Lantus than diabetics in the rest of the world. “The same is true for most brand name drugs and most medical devices. It is an embarrassment that we pay double per capita what comparable western countries pay for health care with worse national health statistics,” he said.
Bill MacDonald shared his story in a Tweet and follow-up messages. This North Carolina retiree on a fixed income has paid $6,000 annually out-of-pocket – a third of his income – for two drugs he’s taken since an automobile accident caused medical problems and depression that led to other issues. He spends $3,200 for one of the drugs, a cholesterol medication called Repatha – that’s his tab after his insurance company pays for most of it. (Last year, Amgen slashed Repatha’s price from more than $10,000 per year to $5,850, which MacDonald hopes will reduce this expense.)
Steve B. was thrilled about a new generic on the market to replace his Rapaflo, a prostate medication. Then he learned that the generic is not much of a bargain either.
Careers Become Dicey after Age 50 …Learn More
March 14, 2019
Drug Discounts, Other Help Available
Consumers are powerless to control spiraling medication prices, but low-income, uninsured and under-insured individuals can often get help paying for their drugs.
The help, in the form of subsidies or prescription price reductions, comes from four sources. The first is exclusively for seniors on Medicare, but the rest are available to everyone.
Medicare’s Extra Help program provides up to $4,900 to subsidize retirees’ drug copayments and Medicare Part D premiums. Individuals are eligible for this assistance if their income is less than $18,210 and the value of their investments, bank accounts and other assets is under $14,390. The limits for couples are $24,690 in income and $28,720 in assets. Retirees who own their homes do not have to include the property’s value in this limit. Social Security’s website explains what does and does not count as assets.
Social Security takes the applications for this Medicare program. Applications can be submitted either online (SSA form 1020) or in person by making an appointment at a local Social Security office. Social Security also notifies seniors about whether they qualify.
Price discounts in an app
If your drug is not covered by your health insurance, Consumer Reports suggests trying two cell phone apps (or go online) to search for the lowest-cost prescriptions at various pharmacies in your area. On the apps – GoodRx and BlinkHealth – search your drug name and dose and enter your zip code to find the discounted prices, which can vary dramatically. These companies act as middlemen between consumers and Pharmacy Benefit Managers, which buy generic and brand-name medications in bulk from manufacturers and pass the volume discounts on to consumers. GoodRx provides a coupon that can be saved on a phone or printed out for the pharmacist. BlinkRx requires consumers to pay for the drug on its website and provides a voucher for the pharmacist. These cash prices will not be run through insurance – and won’t count against your deductible – said Lisa Gill, Consumer Reports deputy editor and a specialist in medication pricing.
Walmart also offers discounts on generic drugs, and Costco has very low retail drug prices. Which option is best for you? “It’s going to depend on which medication you take and probably where you live,” Gill said. Not everyone will have success in reducing their costs but, she added, “if the drug’s not covered by insurance, it’s worth trying.” …
March 7, 2019
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. …
March 5, 2019
Books: Where the Elderly Find Happiness
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
February 19, 2019
Tweaking Social Security for the Future
Social Security remains as vital today as it was after its 1935 passage. But advocates for the nation’s most vulnerable retirees have proposed ways to enhance their benefits.
Consider the minimum benefit. Put on the books in the early 1970s, its goal was to prevent poverty among retirees who had worked for decades in low-paying jobs. The benefit’s value has diminished due to a design flaw that rendered it largely ineffective.
A recent policy brief by the Center for Retirement Research analyzed various modest proposals to increase the minimum benefit and improve low-income retirees’ financial security.
This brief was the last in a series on modernizing Social Security. The relatively low cost of these proposals, many of which have bipartisan support, could be offset by benefit reductions for less-vulnerable retirees. The House of Representatives is planning hearings later this year looking into ways benefits might be enhanced.
The following are synopses of the policy problems and proposals discussed in the other briefs and covered in previous blogs: …Learn More
February 5, 2019
Oregon’s IRA Gets Workers to Save
Luke Huffstutter felt a great sense of relief when the employees of his Portland hair salon started putting money into a state retirement program designed to make saving easy.
This is much better than the “guilt” he felt over many years of desperate attempts – and not much luck – to convince his stylists and other employees to save on their own. He even brought in a financial adviser once to nudge them.
“I have a responsibility to provide them a path to retirement,” Huffstutter said.
Today, 39 of the Annastasia Salon’s 45 employees have joined some 22,000 others across the state of Oregon who’ve accumulated a total of $10 million for retirement through OregonSaves, a state government program being rolled out over time for residents who don’t have savings plans at work.
Oregon was the first state to introduce this type of program, and California, Connecticut, Illinois, and Maryland are following. New York may be next. Mayor Bill de Blasio is proposing a similar program, because more than half of working New Yorkers lack a retirement savings plan at work.
The absence of a retirement plan is a particular problem at small firms, which often lack the money or staff to set up the 401(k) plans common at major employers. OregonSaves, which is mandatory for employers, provides a very low-cost way to automatically enroll workers and send their payroll deductions to personal IRA accounts.
The main stumbling block appears to be that not everyone is as enthusiastic as Huffstutter. Some employers are taking a very long time – more than six months – to set up the payroll deductions, and others that enrolled are showing lower participation rates than the salon. …Learn More