May 18, 2017
Women Get a Bigger Social Security Bump
The magic number is 35.
That’s how many years of earnings the U.S. Social Security Administration (SSA) uses to calculate every worker’s pension benefit. But 35 years can be a tall order for the many boomer women who took time off or cut back on their hours to raise their children. Nearly half of 62-year-old working women today didn’t make any money for at least one year in their earnings history on record with SSA.
But this also means they have more to gain financially than men from working longer, because each additional year of work substitutes for a zero- or low-earning year during motherhood in the benefit calculation, according to research by Matt Rutledge and John Lindner at the Center for Retirement Research, which sponsors this blog.
Beefing up one’s earnings record is actually one of the two ways that working longer raises monthly benefits. The other, more familiar way is a benefit increase from delaying collecting Social Security.
Delaying claiming compresses the time period over which workers will receive benefits. The resulting increase when they finally do start is known as Social Security’s “actuarial adjustment.” Take the most extreme example: both men and women who begin their Social Security at age 70 receive 76 percent more per month from this adjustment than they would’ve gotten had they started at 62.
But it is women who generally gain much more from additional years in the labor force.
By working to 70, rather than retiring at 62, the average woman can increase her monthly Social Security check by 12 percent, the researchers found. Adding this to the standard actuarial adjustment produces an 88-percent increase, from roughly $1,112 per month at 62 to $2,090 at age 70.
The earnings bump that 62-year-old men get from working to 70 is half as big – about 6 percent – because men typically already have had more years of higher earnings during their working lives.
A woman doesn’t have to work all the way to 70 either to benefit. Any period of delay will increase monthly benefits – and that will help. …Learn More
March 30, 2017
Older Workers’ Job Changes a Step Down
When older workers change occupations, many of them move into a lower-status version of the work they’ve done for years, according to a new study by University of Michigan researchers who tracked the workers’ movements among some 200 different occupations.
Aging computer scientists were likely to become programmers or computer support staff. And veteran high school teachers started tutoring, financial managers transitioned to bookkeepers, and office supervisors became secretaries.
Late-career transitions need to be put into some context: a majority of Americans who were still working in their 60s were in the same occupations they held at age 55, the study found. And these occupations ran the gamut from clergy to life scientists to cooks.
Interestingly, while teachers, thanks to their defined benefit pensions, often retire relatively young, primary and high school teachers were also at the top of the list of older workers who have remained in one occupation into their 60s, along with radiology technicians and bus drivers.
But about 40 percent of Americans who were still working when they turned 62 had moved to a new occupation sometime after age 55, according to the researchers, who tracked individual workers’ employment changes using the federal government’s coding system. …Learn More
March 23, 2017
The Benefits of Late-career Job Changes
Finding a new job in one’s 50s is not that easy to pull off, and it’s risky if the new employer doesn’t work out. But there’s a silver lining for people who can make the change to a job they feel is better: they work longer than those who don’t make a move.
A new study by the Center for Retirement Research, which supports this blog, finds the probability that older workers remain in the labor force until they’re 65 increases considerably – by 9 percentage points – if they voluntarily made a job change sometime during their 50s.
This lends credence to other research showing that when older workers voluntarily find a new employer, they often experience more job satisfaction and less on-the-job stress, which makes it easier to resist retiring.
The benefits from changing jobs are both psychic and practical. …Learn More
February 2, 2017
Managing Money with Cognitive Decline
Despite the normal cognitive challenges that people in their 70s and 80s inevitably face, most are sharp enough to be in charge of their financial affairs or oversee them.
But the significant minority of seniors who do have trouble is explored in a new summary of the research by Anek Belbase and Geoffrey Sanzenbacher at the Center for Retirement Research, which supports this blog.
One such group is people learning for the first time how to carry out financial tasks. Widows, not surprisingly, are often required to negotiate this financial learning curve, which gets steeper as a senior’s ability to process new information erodes. With guidance from a family member or professional, however, the novices can usually figure things out.
Seniors with mild cognitive impairment might also develop problems. Mild impairment becomes fairly common by the time people reach their 70s, affecting their financial judgment and potentially their ability to manage their affairs in ways that promote their best interests. Among those with mild impairment, 82 percent can independently handle the various financial tasks they face, such as paying bills, managing bank accounts, and maintaining good credit. This compares with 95 percent of unimpaired seniors.
Another danger facing seniors with mild cognitive impairment is their vulnerability to fraud. They are usually aware they’re slipping, yet they may remain confident about their ability to handle their financial affairs. …Learn More
January 24, 2017
The Late-1950s Boomers: Hit by Divorce
It’s old news that the many baby boomers who did not get married and stay married are worse off financially than those who did. Unfortunately, the financial damage to one segment of this generation has broken new ground.
Only 44 percent of “middle boomers” – those born in the late 1950s – have remained married to their original spouses, down from 52 percent of their parents’ generation. Middle boomers are also far more likely to have lived with partners without marrying, remained single all their lives, or even to have divorced twice.
The heart of a study is determining which of middle boomers’ choices were most likely to have led to financial distress when they reached their pre-retirement years.
About 11 percent of middle boomers had negative net worth by the time they were in their early 50s – more than double the share for the generation born during the Great Depression when they reached this age. Negative net worth means that middle boomers’ mortgages and other debts exceed the value of their assets; in this study, assets included everything from retirement plans and taxable bank accounts to primary and vacation homes.
To understand why, the researchers culled marital histories from a survey of older Americans. They found that four lifestyles are most strongly linked to middle boomers’ negative net worth: never marrying, going through one divorce and becoming single again, separating from a second marriage, and divorcing from a second marriage.
In all of these situations, the individuals were about three times more likely to have negative net worth than were the continually married middle boomers. The study controlled for age, gender, race, education, health, household income, and the number of offspring.
Middle boomers are the “least prepared for retirement” out of four groups studied, the researchers concluded, and their choices around marriage have been important contributing factors.Learn More
January 24, 2017
Can Work Enhance Seniors’ Social Lives?
What wasn’t known is how work affects the social lives of older people. Does work foster social ties or limit the time one has to socialize?
A new study by Eleonora Patacchini at Cornell University and Gary Engelhardt at Syracuse University finds that those who continue to work have larger social networks.
They analyzed responses to the following question by more than 1,300 survey participants in the National Social Life, Health and Aging Project. The participants were ages 57 to 85 in 2005 and answered the following question then and again in 2010:
“Most people discuss things that are important to them with others. For example, these may include good or bad things that happen to you, problems you are having, or important concerns you may have. Looking back over the last 12 months, who are the people with whom you most often discussed things that were important to you?” …Learn More
December 8, 2016
Inside the Minds of Older Workers
A decade of research into the impact of cognitive aging shows that workers throughout their 50s and 60s are generally just as productive as the younger people working alongside them.
A new summary of this research, by the Center for Retirement Research at Boston College, explains how older people are able to adapt to the gradual loss of brain mass in the parts of the brain associated with memory and an ability to think on one’s feet – their “fluid intelligence.”
The highly skilled pharmacy profession is a good example of how workers in their 50s or 60s adjust to this changing dynamic. These pharmacists have an advantage over their younger coworkers in what psychologists call “crystallized intelligence,” which is the deep reserve of information stored up over decades of working in their profession. They can no longer process drug interactions and other new information as rapidly as they once did. But they can tap into their reserves to solve the myriad issues that crop up in their work. This crystallized intelligence – for pharmacists and many other types of skilled jobs – is effectively making up for their loss of fluid intelligence.
Interestingly, older workers who execute routine tasks usually aren’t at risk of aging out of their jobs for cognitive reasons either. That’s because even though their fluid intelligence is in decline, they have more than enough of it in reserve to complete their relatively simple tasks.
While the majority of older workers do not lose their productivity due to cognitive aging, two groups are vulnerable. One group is those for whom the work demands on their fluid intelligence are extremely high. A 2009 study of air traffic controllers highlighted this challenge – and demonstrates the logic behind a Federal Aviation Authority requirement that controllers retire at age 56. …Learn More