Illustrated people

The Secret to Feeling Younger

You’re as young as you feel!

This cliché is meant to be uplifting to older people. But it really just begs the question: what, exactly, is it that makes a person feel young?

Having a sense of control over the events in one’s life is the answer that emerged from a 2019 study of 60- to 90-year-olds in the Journal of Gerontology. “[B]elieving that your daily efforts can result in desired outcomes” lines up nicely with what the researchers call “a younger subjective age.”

This makes a lot of sense. Feeling in control becomes important as we age, because it counteracts our growing vulnerabilities – we can’t move as fast, hear as well, or remember as much. Wresting back some control can rejuvenate older people, instill optimism, and improve memory and even longevity, various studies have found. …Learn More

Illustration of slum and hospital

Financial Survival of Low-Income Disabled

A monthly disability check from the federal government is a lifeline for poor and low-income persons with disabilities, but they still face a daily struggle to meet their basic needs and cover their expenses.

In in-depth interviews, 35 low-income people in Worcester, Massachusetts, described how they make ends meet on the disability benefit they get from Social Security, which averages $912 a month and is their largest source of income. Another $300 comes from other forms of public assistance, family support, or minimum-wage jobs, according to a new issue brief by Mathematica’s Center for Studying Disability Policy.

The daily struggles that each individual faces are as unique as they are. Here are a few excerpts from the study:

“My rent is subsidized. Plus I work 20 hours a week which is pretty good. I bring home more than one hundred something dollars a week and I get a few dollars in food stamps. So it’s okay.”

“I’m stringing it, managing it, and just barely staying above water. I’ve been treading that water for a long time.”

“My situation is challenging. I sometimes just don’t have enough coming in to make what’s going out.”

Three out of four people in the study told interviewers that they find it very difficult to pay for their housing, food and other basic expenses. A bright spot is that people on federal disability insurance (DI) are also covered by Medicare and/or Medicaid and spend very little on medical care.  “I’m getting everything I need,” one individual said about her healthcare. …Learn More

Half of Retirees Afraid to Use Savings

For most retirees, figuring out how much money to withdraw from savings every year is a difficult-to-impossible math problem. But the issue goes much deeper: fears about what the future might bring make this decision overwhelming.

Extreme caution is a popular solution. A 2009 study estimated that by the time middle-income retirees are in their 80s, they still had not touched about three-fourths of their savings, and 2016 research found that retirees with substantial assets are the most reluctant spenders. Vanguard recently reported that retirees with very modest savings turn around and reinvest a third of the money they’re required to withdraw under IRS rules after age 70½.

People saved all of their lives to make sure they will enjoy retirement. So why are they so reluctant to spend the money for the purpose it was intended?

A 2018 study in the Journal of Personal Finance surveyed retirees to get a sense of the psychology behind their caution.

Half of the survey respondents agreed with this statement:  “The thought of my retirement portfolio balance going down over time brings me discomfort, even if the decline in value is a result of me spending money on my retirement goals.”

And the people who agreed with this statement said they feel like they are not well prepared financially to retire – and this had nothing to do with how prepared they actually are. …Learn More

What Personality Says about Your Wealth

A person’s finances are not determined simply by obvious factors like how much they earn – personality can also make a difference.

A new study has identified three personality traits that play a role in how individuals handle their nest eggs. For example, conscientious people – self-disciplined planners – are more careful and have more wealth at the end of their lives.

The University of Illinois researchers looked at two types of wealth: within employer retirement plans and outside of these plans. They did not find a connection between the wealth levels in employer plans and various personality traits, a result they anticipated because retirement wealth has more to do with a retiree’s work history and earnings.

But they did find a connection between personality and the wealth individuals hold outside of their retirement plans. Even though the majority of retirees have very little of this wealth, it’s still interesting to see the connections.

For example, retirees who are open to new experiences – they are imaginative, proactive, and broad-minded – behave like conscientious people and preserve their wealth, especially after their mid-60s, according to the study, which was conducted for NBER’s Retirement and Disability Research Center.

Agreeableness works in the opposite direction. Agreeable people are known for being soft-hearted, friendly and helpful – they also tend to care less about money or about managing it. Not surprisingly, they have less wealth. …Learn More

Aerial photo of a row of houses

Many Demands on Middle Class Paychecks

Ask middle-class Americans how they’re doing, and you’ll often get the same answer: there are still too many demands on my paycheck.

Several recent surveys reach this conclusion, even though wages have been rising consistently at a time of low inflation.

Student loans trump 401(k)s. Two top financial priorities are in conflict: student loan payments, which people described as a “burden,” and saving for retirement, which they viewed as “important” in a TIAA-MIT AgeLab survey.

The debt seems to be winning: three out of four adults paying off student loans say they would like to increase how much they save for retirement but can’t do it until their loans are paid off – and that can take years. One woman described her loans as “draining” her finances.

A promising sign on the horizon is that some employers are finding creative ways to help employees pay down college debt, giving them more leeway to save money in their 401(k)s. But these efforts impact a small number of workers, and the amount of debt continues to rise year after year for every age group, from new graduates to baby boomers who helped send their children and grandchildren to college, a Prudential study found.  

Buying a house isn’t an option. The good news is that about half of Millennials already own a home. Most of the others want to buy a house but can’t afford it, 20- and 30-somethings told LendEdu in a survey. Their top reasons were student loan and credit card payments and a lack of savings, which is the flip side of having too much debt.

Millennials are also putting off other goals until they get a house – marriage, children, even pets. “It’s quite obvious that this uphill battle” and debt “is having secondary effects,” said LendEdu’s Michael Brown.

Medical debt looms large. Americans borrowed $88 billion last year to pay their hospital, doctor, and lab bills. That debt fell hardest on the 3 million people who owe more than $10,000, according to an estimate by the Gallup polling company and a group of healthcare non-profits. …Learn More

Social Security poster

Readers Debate Retirement Issues

It’s always interesting to see which Squared Away blogs get the strongest reaction from our readers. The June blog, “Husbands Ignore Future Widows’ Needs,” was one of them.

Some readers felt that the results of the study described in the article don’t match up with their experiences. The researchers determined that husbands often are not sensitive to the fact that if they sign up for Social Security in their early 60s, they could be locking in a smaller survivor benefit one day for their widows.

“The elderly couples with whom I do retirement planning are typically very conscious of each other’s needs,” said a critic named Jerry.

But financial planner Kathleen Rehl has the opposite experience when working with couples. “Most couples hadn’t previously known their options and ramifications of those choices,” she said. “Such an important planning concept.”

The blog was based on a study conducted for the Retirement and Disability Research Consortium – consortium studies by researchers around the country are featured regularly on Squared Away.

Here are other 2019 articles about the consortium’s research on various retirement and labor market issues that readers weighed in on: …Learn More

Social Casinos: Stay Far, Far Away

This report about online casinos is incredible.

The PBS Newshour reports that these gambling websites – for poker, roulette and slots – are able to target people who are the most vulnerable to gambling addiction. The video features a site that assigns VIP status to encourage vulnerable customers to keep playing.

That’s not the only problem. Customers pay real money to buy chips to gamble or cover their losses on the gambling site. But when the customer wins, the website “do[es]n’t pay real money. They only…give you virtual chips to continue to play on their apps,” said a Dallas woman who said she lost $400,000 while gambling online.

Only 1 percent of Americans are gambling addicts, so the problem, while very serious for them, is not widespread. However, in the video, Keith S. Whyte of the National Council on Problem Gambling said that online social casinos are far more addictive than brick-and-mortar casinos.

Whyte said these social casinos are not regulated. The social casino profiled in the video said that it strives “to comply with all applicable standards, rules and requirements.” …Learn More