Falling Math Scores May Cut Future Earnings

Scores on 8th grade standardized math tests dropped during the pandemic, reversing a large part of the gains students had made since the 1990s. U.S. Secretary of Education Miguel Cardona called the news last October “appalling.”

But declining scores only confirmed for many parents what they had witnessed as their children struggled to engage in classes conducted over Zoom when the schools were closed down.

Now comes some of the fallout. The decline in math scores between 2019 and 2022 is expected to reduce the lifetime earnings for the average student by nearly 2 percent, or $19,400 in today’s dollars, according to a new study.

This may not sound like a lot spread out over a decades-long career. But think about it this way: after years of rising test scores and incomes, recent 8th graders may lose several hundred dollars a year in income just because they grew up during a pandemic.

And the impact of being competent in mathematics goes beyond lost earnings. Lower test scores lead to lower graduation rates, fewer kids in college, and more teen pregnancies, arrests and incarceration. So, it’s important to make sure these kids make up for lost time by improving their test scores during high school. …Learn More

Long Wait Times Deter Disability Applicants

Applying for federal disability benefits is a precarious situation for workers who were either forced, or have chosen, to quit their jobs due to an injury or chronic medical condition. There are no guarantees an application will be approved, and it can be hard to find a job after waiting months for a decision on whether they qualify for the benefits.

In new research documenting how long individuals wait for a decision on their initial disability applications to a Social Security Administration (SSA) field office, the average ranges from about seven to nine months.

The entire process can take twice as long if SSA denies the request for benefits and the applicant appeals within the agency or to an administrative law judge or federal court, the researchers found.

Wait times between the initial filing and resolving all appeals fluctuated quite a bit, at least during the study’s time period – 1996 through 2014 – but ended at a higher level than where they started. The waits in exurban and rural areas increased more than in urban areas.

Why does this matter? In addition to the burden on applicants of having to wait, long waits may be dissuading people from applying for disability. Counties that took longer to process applications and resolve all the appeals saw fewer applications the following year, the researchers found.

The impact of wait times on future applications provides preliminary “evidence of the importance of how SSA processing interacts with applicant behavior,” the researchers said.

The amount of time it takes to process an application can vary for all sorts of reasons. Certain severe medical conditions that are clearly disabling can speed things up. But submitting an incomplete application or applying to a particularly busy field office can lengthen the process. …Learn More

50 Years of Financial Progress for Women

As the lower-paid sex, women have no shortage of insecurities about their retirement finances.

Only one in five working women feels “very confident” of being able to retire comfortably, the Transamerica Center for Retirement Studies reports in its annual retirement survey. More than half say they don’t earn enough or have too much debt to leave a lot of room for saving. Four in 10 expect to retire after 70 or not at all.

These insecurities probably reflect, to some extent, the poor retirement preparedness of Americans as a whole, not just women. In fact, women have made significant strides over the past half century. A new study documenting their personal and economic progress since the 1970s finds that their financial standing, compared with men, has improved.

Granted, women are still a long way from pay parity. But the improvements in retirement preparedness are impressive because they occurred despite the fact that women have become more independent – they are more likely to be living on their own and supporting themselves. Roughly two-thirds of boomer women born after 1953 either have never married or have been divorced for some part of their adult lives, according to the Center for Retirement Research.

What undergirds their personal and financial independence are college degrees and women’s growing participation in the labor force over five decades.

One in three baby boomer women born in the mid-1950s through the mid-1960s has a college degree – twice that of their mothers who were born during the Great Depression. Armed with the degrees, young boomer women flooded into the labor force. Three-fourths were working between their mid-30s and mid-40s, compared with 57 percent employment in the Depression-era cohort at that age. Men’s labor force participation has been much higher historically but barely changes over time.

Black women have always worked more than White women. But they too increased their labor force participation as they gained more education.

So how has women’s robust participation in the work world bolstered their financial security? …Learn More

Readers’ Favorite Retirement Blogs: 2022

Older Americans who want to be smart about retirement finances are curious about the intricacies of Social Security.

The blog that drew the most traffic from our readers last year – “The Bridge to a Larger Social Security Check” – suggested a strategy for getting more out of the program: delay signing up for Social Security by withdrawing savings from a 401(k) to pay the bills.

Each year that Social Security is postponed adds 7 percent to 8 percent to a retiree’s monthly benefit check. A couple of years of delay, funded with savings, can provide significantly more money, month after month, to pay the bills. The researchers concluded from an experiment that asked older workers to consider the delay strategy that a substantial minority “are interested in a bridge option despite its unfamiliarity.”

Another popular blog last year was about an experiment involving another unfamiliar concept fundamental to the program: the Retirement Earnings Test. In “Explaining Social Security’s Earnings Test,” readers learned that any reduction in benefits that occurs if they simultaneously work and collect the benefit in their early to mid-60s is not a tax.

Instead, under Social Security’s rules, some of an older worker’s benefits may be deferred. The benefits are incrementally added back into his monthly checks after he reaches his full retirement age under the program. Understanding that the reduction in benefits is a deferral, rather than an outright cut, is an important aspect of the program that is increasingly important for older workers looking for strategies to improve their standard of living in retirement.

If delaying Social Security is good for older workers’ financial security, the article “COVID’s Impact on Social Security Claiming” delivered a little good news. The generous, extended unemployment benefits approved by Congress made it easier for older workers who lost their jobs during the 2020 spike in unemployment to remain in the labor force rather than sign up early for their benefits and lock in a smaller monthly check.

This positive pandemic trend was a stark contrast to the Great Recession. During months of protracted unemployment following the 2008 financial crisis, jobless older workers became more likely to resort to signing up for Social Security because they needed income.

One aspect of retiring and aging that can really throw a wrench in financial planning is medical costs. In “A Start on Estimating Retiree Medical Costs,” the researcher estimates that retirees with average healthcare needs must cover about 22 percent of their total out-of-pocket costs, excluding premiums, or just over $67,000 in total over their remaining lives. Retirees needing high levels of care can spend twice as much.

Another unknown: long-term care. A study covered in “Spouse in Nursing Home Raises Poverty Risk” finds that one in three married people in their early 70s is likely to have a spouse who will eventually wind up in a nursing home. Not all nursing home stays are for an extended period of time. But if an unlucky spouse does have a long stay, the couple is significantly more likely to become impoverished while paying for the care.

Other popular blog topics in 2022 included Medicare, work, and profiles of individual retirees: …Learn More

Connect with a Senior During the Holidays

Hannah Boulton defies the stereotype of the lonely retiree longing for companionship during the holidays. But after two-plus years of a pandemic, even this dynamic former nurse who’s lived on three continents started feeling a little isolated.

Ally Brooks and Hannah Boulton

Ally Brooks and Hannah Boulton

Then she met Ally Brooks, a high school senior, through the Sages and Seekers program at the senior center in Duxbury, Massachusetts, in September. The program, modeled on a national nonprofit’s workshop, paired up seven retirees with seven high school seniors. It was such a success – the program was Boulton’s’ idea – that a second one is planned in January for a new crop of seniors.

The 76-year-old Boulton and Brooks bonded immediately over their love of travel. Boulton shared her adventures, having lived in Okinawa during the Vietnam War, where her first husband was stationed, and in Karlsruhe, Germany, where her second husband worked.

And she encouraged Brooks to follow through with a plan to apply to four colleges in England and Scotland, including, coincidentally, one that Boulton’s late husband had attended. “I was so excited for her, and of course I’ll visit her” in college, she said. “I just feel like we’re connected.”

Participants in the Sages and Seekers program

Participants in the Sages and Seekers program

Chris Coakley, who manages the volunteers for the Duxbury senior center, said the Sages and Seekers program fulfilled its goal of easing the isolation she saw was affecting the town’s older residents.

A significant minority of older Americans in various surveys have said they are lonely, and the pandemic only heightened that feeling, which already existed for reasons ranging from hearing loss to struggles with the death of a spouse or a chronic illness.

The pandemic, Coakley said, made the center’s staff realize “how important it was to have connections.”

So consider taking the initiative yourself to reach out to an older family member or neighbor. Invite someone for a meal during the holidays or drop in for a visit.

It takes a little work. But the effort will make a difference. …Learn More

Retirees Do a Stint in London – and Why Not?

Joanna McIsaac-Kierklo in Dublin

Joanna McIsaac-Kierklo in Dublin

Many retirees, freed from their work obligations and looking for adventure, dream of living overseas. Edward Kierklo and Joanna McIsaac-Kierklo don’t dream. They just do.

In May 2021, the couple, feeling trapped by the pandemic in their sleepy town in the Sierra Foothills east of San Francisco, decided to break out and trade rural life for 11 months in London. Joanna’s always been a risk-taker, starting at 22, when she moved to Idaho to be a Vista volunteer. London was her idea.

“Joanna says, ‘I’m tired of looking at these floors and cleaning an 1,800-square-foot home,’ ” Ed, 73, recalled. “She said, ‘Let’s sell the place and go to London.’ I said okay.”

The pandemic played a starring role in their big move. “We felt isolated and a little itchier than we might’ve been so we traded an almost-rural area for a distinctly urban setting,” he said. They relocated to London, vaccinated and boosted, in November 2021.

Edward Kierklo in Warsaw

Edward Kierklo in Warsaw

The couple, who married in their 50s, have the two things that are critical to an ex-pat adventure: fun money and their health. From their new home base, they were able to take weekend getaways all over Great Britain and on the Continent. But it took a lot of planning to move overseas.

Joanna, a former project manager in the healthcare field, is the planner in the family too. She found a London real estate specialist and figured out how to ship their Birmin cat, Suzette, across the pond – for $4,200. They flew to London and found a fifth-floor apartment in a concierge building in the borough of Ealing. The trains, shops, and restaurants were within walking distance so they didn’t need a car, and Joanna went online and bought the furniture, pots, pans, and all things necessary for the new place.

“I take the reins,” she said about their adventure. “I lift all the boxes,” Ed said.

They sold the house in California’s hot real estate market to a cash buyer 18 hours after putting it on the market and booked a nice profit. “Anyone who owns property in California is a millionaire,” said Joanna, 72.

Ed, a retired information technology professional, quickly learned that renting in London is complicated. Retirees must go through an “intrusive” and “bureaucratic” process requiring six months’ rent upfront and disclosure of numerous financial documents, he said. But he was born in England – his parents emigrated from Poland – so his British passport smoothed the path to getting a bank account. Having a passport also meant he didn’t need a visa to live in London.

Joanna, on the other hand, did. She obtained a six-month tourist visa, which required her to leave the country and return to California before her six months ran out. She then flew back to London to restart the visa clock.

During their stay, the couple enjoyed sinking into the local culture. …Learn More

Big COLAs in State Minimum Wages Kick in

During the long and tranquil period for inflation that ended with COVID, 18 states passed legislation requiring employers to pay a minimum wage that automatically increases every year to protect their lowest-income workers from inflation.

With inflation surging to 7 percent in 2021 and running even higher this year, the cost-of-living increases are paying up.

Many state minimum wages are now 1 1/2 to 2 times the federal minimum wage, with another round of increases coming in January 2023. Congress, on the other hand, hasn’t increased the $7.25 hourly federal wage since 2009, widening the disparities between the states that tie their minimum wages to the federal level and the states that routinely raise theirs to keep up with inflation.

The federal minimum wage of $7.25 is in effect in Indiana, Idaho, Iowa, Georgia, Kansas, Kentucky, New Hampshire, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, Wisconsin, and Wyoming. For a full-time worker, that adds up to about $15,000 per year or barely above the federal poverty line, though many employers are paying more to compete for workers in the midst of a labor shortage.

The Economic Policy Institute (EPI) estimates that the value of the federal minimum has fallen 12 percent just in the past two years of unusually high price increases. That’s on top of a decade in which the federal wage was sharply eroded by modest inflation year after year.

“These inflation-driven cuts can snowball quickly,” the EPI said in a recent report. “Faster inflation makes it more important, not less, to raise the federal minimum wage.”

Most of the states with legislation on the books to automatically increase their minimum wages had done so well before COVID supply constraints caused inflation to kick up.

Washington, which began indexing its wage in 2020, has the highest state minimum wage, and it will increase by 8.6 percent increase to $15.74 on Jan. 1. In California, the minimum wage will rise to $15.50 an hour for employers with 25 or fewer workers – a 19 percent increase over a two-year period that will bring them into parity with the wage requirement for larger employers. Many other states have scheduled increases to $15 in the next few years. …Learn More