Retiring to Care for Grandchild isn’t Unusual

Retirement can change everything. So can grandchildren.

A new study that looks at the transitions made by older workers finds that the odds of relocating after they retire to be closer to their adult children increase from the pre-retirement years – 16 percent of recent retirees do so.

Some people make these moves, to within 10 miles of family, right around the time of retirement, but the relocations are still happening at least four years afterward.

A new grandchild provides an even more compelling reason to move at a time quality childcare is expensive and in short supply. In the study, the researchers found that one in 10 grandparents who, prior to retiring, already considered themselves caregivers for at least one child move closer to the child’s parents. That doubles to two in 10 after they retire.

The probability of making a move is “higher for older adults reporting grandchild care compared to their peers who do not provide such care,” conclude Megan Doherty Bea and Somalis Chy at the University of Wisconsin.

They tracked some 3,000 older workers’ answers to a regular survey during a 12-year period around retirement. The survey collected a range of personal data, including information about their finances, where they live, and whether they spend at least 100 hours a year taking care of grandchildren.

One curious aspect of this study is that retiring and moving doesn’t necessarily mean the person will simultaneously sign up for Social Security benefits, which raises the question of how the new retirees support themselves. …Learn More

The Shrinking Middle and Shrinking Wages

Henrietta and Joseph Virchick

Henrietta and Joseph Virchick

My husband likes to tell a story about his father, Joseph Virchick, who was a pipefitter for the Standard Oil refinery in Bayonne, New Jersey, starting in the 1950s. It was a union job – the Teamsters – paying solid middle-class wages that supported his family in an upscale Levitt development with its own swimming pool.

The point here is that this pipefitter with a high school degree lived about as well as his college-educated neighbors who commuted into nearby Manhattan. Virchick and his wife, Henrietta, who also worked, sent all three kids to college. When he retired in the 1980s, they had a pipefitter’s pension to supplement their Social Security.

Today, only 6 percent of private-sector workers are unionized. Something else is going by the wayside along with unions and company pensions: a thriving middle class.

Boston College economist Geoffrey Sanzenbacher argues in his new book that while the U.S. economy, on a per capita basis, has more than doubled in size since 1975, the typical middle-class man’s income, adjusted for inflation, has shrunk by about $2,500, to $60,375 in 2020. (He tracked men’s wages, because the story about women, who flooded into colleges and into the labor force more recently than men, is messier.)

“During a four-decade stretch, middle-class workers lost ground,” Sanzenbacher writes in “The Six Facts that Matter: Understanding Inequality in the United States.”

The same powerful forces that have caused regular workers’ wages to decline also fueled the widening disparities between middle- and lower-paid workers and the people at the top, whose pay has increased since the 1970s. To be sure, lower-paid workers have gained back some of that ground since the pandemic began, and their wages have risen faster than higher-income workers’ pay. But the large inequities persist.

Sanzenbacher blames two things for the eroding middle class: globalization and technology.Learn More

COVID’s Impact on Claiming Social Security

The economy expanded smartly in the years before the Great Recession, just as it did before the COVID downturn. But the two recessions were markedly different, with opposite effects on when older workers signed up for Social Security, a new study finds.

In 2008, the stock market slid nearly 40 percent. Older Americans with retirement accounts, wanting to recoup their losses, were more likely to keep working or looking for a new job during the protracted downturn. But skyrocketing unemployment pushed many older workers in the other direction.

Social Security became an obvious fallback in the Great Recession for jobless workers who were at least 62 years old as the unemployment rate stagnated at around 10 percent for 1½ years. Not surprisingly, then, more people overall started claiming the retirement benefit early.

The COVID recession had the opposite effect on Social Security claiming. There was a slight decline in the likelihood that older workers started their benefits early – defined as prior to Social Security’s full retirement age – according to the Center for Retirement Research.

COVID played out differently mainly because the generosity of the federal pandemic assistance was unprecedented. First, in March 2020, Congress approved $600 weekly payments to supplement the standard unemployment benefit and extended them for 13 weeks. In December 2020, Congress renewed the weekly supplement at $300 and extended the benefits for 11 weeks. In March 2021, they were extended again through the end of September.

During COVID, the slight drop in claiming Social Security early was driven by older workers whose earnings are in the bottom two-thirds of all workers’ earnings. The unemployment support from the federal government made it easier for them to stay afloat without having to sign up for the retirement benefit.

The stock market also behaved much differently in the pandemic than in the 2008 financial crisis. During COVID, the market snapped back within months of its steep drop. The Standard & Poor’s 500 index rose 18 percent in 2020 and soared another 28 percent in 2021. House prices also surged.

People with assets responded to their newfound wealth, becoming more likely to sign up for their Social Security benefits early relative to those without assets, the researchers found.

Still, this impact was more than offset by the decline in early claiming overall because more older Americans were using their generous unemployment benefits to keep paying the bills. …Learn More

COVID’s Small Impact on Future Mortality

The most COVID deaths were among Americans over age 60, who accounted for 300,000 of the 500,000 U.S. deaths from the disease in its first year.

A new study by the Center for Retirement Research finds, not surprisingly, that the oldest survivors of the early months of the pandemic were healthier than those who died from the virus. Taking this into account, the researchers estimated what mortality might look like in a “post-COVID” world in an analysis that was based on a big assumption – that COVID’s deaths were confined to a single year.

Factoring in the early impact of the virus, the researchers found that, despite COVID’s tragic toll in the over-60 population, their future mortality would decline only slightly because the number of COVID deaths was low relative to the group’s overall population.

Even a small drop in mortality might seem counterintuitive at a time the media were widely reporting that COVID was causing a dramatic increase in the annual death rate. But future mortality is different.

The researchers decided to test whether mortality would decline over the next decade because the older people who survived the pandemic were less likely to have the medical conditions like heart disease, high blood pressure, and cancer that made others in their age group vulnerable. COVID’s survivors are a healthier population, they explained, with lower mortality rates than those who entered the pandemic. …Learn More

The Cost of Having a Disability in COVID

In COVID’s early months, millions of workers’ incomes dried up as the unemployment rate skyrocketed. But older Americans were somewhat shielded from the downturn.

That’s because they either are over 62 and on Social Security or receive federal disability benefits every month at higher rates than young adults. And just like everybody else, they got relief checks from Congress to soften the blow from the pandemic.

Yet, despite the reliability of a government check, older Americans with disabilities suffered from “acute financial insecurity,” according to a new study that seeks to understand why.

During the pandemic, people over the age of 50 with disabilities reported having much more difficulty paying for food than people without a disability. They also showed more signs of financial distress, including missing a payment on a credit card, utility, or medical bill, researcher Zachary Morris found.

But the heart of his analysis of household financial data was confirmation of his suspicion that a loss of income was not the primary reason that financial insecurity increased for people with disabilities during the pandemic.

Much of the strain came from higher spending likely resulting from rising costs for disability-related items such as prescription drugs like insulin, assistive technologies, and personal protective equipment to protect themselves during the stay-at-home orders. A 12 percent increase last year in the cost of home health aides was a prime example that hit people with disabilities particularly hard. …Learn More

Happy Thanksgiving!

The staff at the Center for Retirement Research at Boston College who put together this blog hope our readers have a safe, joyful and delicious Thanksgiving with family and friends.

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Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. This blog is supported by the Center for Retirement Research at Boston College. Learn More

Tis the Season to Shop for Medicare Options

Americans are fighting back against soaring food prices by shopping at discount grocers, buying lower-cost store brands, or giving up their favorite gourmet items.

Yet Medicare beneficiaries usually don’t shop around for a less expensive insurance policy or a higher quality one. It’s also advisable for retirees to review their current plans to make sure they still include the right doctors or prescription drugs for treating any new medical conditions. Open enrollment for Medicare Advantage and Part D plans started Oct. 15 and ends Dec. 7.

Over their lifetimes, retirees will spend an average $67,000 out-of-pocket for medical care – and that does not include the monthly premiums. The least healthy retirees will pay twice that much.

Yet only three in 10 people surveyed in 2019 by the Kaiser Family Foundation said they compared their existing Medicare insurance policies with the new policies that came on the market during open enrollment for 2020. Three groups who would probably benefit most had the lowest rates of shopping around: low-income and minority retirees and people over 85.

Given retirees’ reluctance to comparison shop, it should not be a surprise that the vast majority stay put and don’t change their policies. The share of people who do change a plan bounces around from year to year but not by much, Kaiser found. …Learn More