October 6, 2020
Boomers Move into Post-Career Jobs
Many baby boomers retire the conventional way – by leaving their career jobs. For the others, the first step in retiring involves stopping over in a different job than they’ve held for years.
A sketch of the older workers who transition to post-career jobs – and their reasons for doing so – emerges from a survey of a fairly elite group of mostly college-educated professionals: clients of the Vanguard investment company.
They made the job transitions for a variety of reasons. More than half of them either had initially retired but decided to go back to work or were forced out of a long-term job by a layoff, firing, or business closure. However, Vanguard’s clients are apparently in good health, because they rarely made changes due to a medical condition.
The boomers usually changed jobs during their 50s. The post-career jobs were often in entirely different occupations or industries, which required the workers to make big trade-offs, according to the 2015 survey, which was designed by Vanguard and several academic researchers.
The old positions were usually full-time, and, as a result, had rigid schedules. Half of the people who found a new job said they now have flexible schedules. But everyone who moved into a post-career job took a 20 percent pay cut, on average, either because they’re working fewer hours or are in a different industry or occupation where the skills honed over the years are not as valued.
There’s also telling evidence that many of the boomers in post-career employment were eager to make this tradeoff. They typically moved from the career job to the new one in about a month, an indication that many had landed the new job prior to leaving the old one. …Learn More
October 1, 2020
Cash from Kids Slows After Parents Retire
But a new study uncovers a twist in this familiar story: once the parents are old enough to collect Social Security, the money flowing from adult child to parent slows down. And when this occurs, the offspring are able to start saving money.
Social Security, by reducing disadvantaged parents’ reliance on their children, “may be able to interrupt the cycle of poverty between generations,” Howard University researcher Andria Smythe concluded from her analysis.
To chart changes over time in cash transfers within families, Smythe followed U.S. households’ finances between 1999 and 2017 using survey data from the Panel Study of Income Dynamics.
She found that the financial support going to parents in the bottom half of the U.S. income distribution was substantial. These parents received about $8,000 from their offspring over time. In contrast, among the higher-income families, money consistently flowed in the opposite direction – from parent to child.
After the lower-income parents turned 62 and started their Social Security, the likelihood the adult children would continue to support them declined, according to the study, which was conducted for the Retirement and Disability Research Consortium.
This, in turn, had a positive effect on the adult children’s wealth. People who grew up in lower-income families saw the biggest bump in wealth, adding about $13,000 in the years after their parents turned 62.
Social Security benefits, Smythe concludes, “may contribute to wealth-building among the adult children’s generation.”
September 29, 2020
How High School Finance Courses Fail
In more than 30 states, completing a personal finance course is required for a high school degree.
The requirement started gaining traction around the country in 2005, despite the long-running debate about whether the courses even work.
A new study gets at whether high school instruction is effective by asking a fresh question: do the finance classes make people feel better about their situation – and feeling better about one’s finances is an indication things are, in fact, improving.
This departs from past studies focused on objective measures like credit scores and past-due loans.
The researchers find that high school courses have generally been a positive development: adults who grew up in states that require the courses do, in fact, feel better about their finances compared to people from states lacking a requirement.
But what’s interesting in this study is that a group of disadvantaged Americans feel worse off for having taken the courses: high school graduates who didn’t go on to college. Rather than helping them manage their financial challenges, the classes are only making things worse.
Before examining the reason for this, consider how the researchers measured the feeling of well-being. They used recent data from a series of questions asked by the FINRA Investor Education Foundation: Do you feel you have control over your money? Could you afford an unexpected expense? Do you have a sense of achieving your financial goals?
Most important, FINRA asked, do you have the financial “freedom to make choices that allow a person to enjoy life”? FINRA’s survey was conducted in 2018, but this question is relevant in the COVID-19 recession. Enjoying life is essentially the flip side of having financial stress, which is currently very high among low-income workers without college degrees.
The researchers argue that adults with no more than a high school diploma who’d taken the personal finance classes feel worse, because the classes delivered a “harsh dose of reality” that can “make economically vulnerable people more aware of their precarious financial situation.” …Learn More
September 22, 2020
More Gen-Zers are Living with Parents
When Millennials’ unemployment rate spiked during the Great Recession, millions of them alleviated their financial problems by moving in with their parents.
Now the coronavirus is chasing Generation Z back home.
Some 2.6 million adults, ages 18 to 29, who had been living on their own moved back home between February and July, the Pew Research Center reports. This pushed up the share of young adults living with one or both parents to 52 percent, which exceeds the rate reached during the Great Depression.
Pew’s analysis included some Millennials. But members of the younger Generation Z account for the vast majority – more than 2 million – of the young adults who’ve returned to the financial security of their parents’ homes this year. [This count does not include college students who came home and attended classes remotely after their schools shut down last spring.]
As was the case for Millennials, what sent Gen-Z back home was a sharp rise in their unemployment rate, Pew said. For example, the rate for people in their early 20s has more than doubled this year to 14.1 percent.
No age group escapes the impact of a recession. The current downturn is the second in a decade for baby boomers, who have faced these major setbacks just as they are trying to square away their finances for retirement.
Losing a job and financial independence as a young adult also has long-term consequences. … Learn More
September 22, 2020
Isolation May Worsen Impact of Disability
A danger for working-age people with disabilities is that they become socially isolated, which can cause a further deterioration in their health and ability to function.
A good example of this vicious cycle is people with severe arthritis. If joint pain makes walking more difficult, it can limit one’s ability to do things with friends or be out in public, which means more social isolation and less exercise to ease the pain’s disabling effects.
A new Mathematica study connects this phenomenon to the sharp rise in the share of Social Security disability awards going to people with arthritis, back pain, and other musculoskeletal conditions.
Between 1997 and 2017, there was a slight increase, to 13.4 percent, in the share of Americans with musculoskeletal conditions who reported being socially isolated, according to the study, which was conducted for the Retirement and Disability Research Consortium.
Discomfort in social settings is also present in the general population – but at about half the rate, or 6 percent of adults.
Another contributor to social isolation is cognitive impairment, which includes confusion and poor memory. Cognitive impairments are also on the rise among people with arthritis and related conditions. The increase can’t solely be attributed to the aging of the U.S. population either, because the analysis controlled for age in order to eliminate its effects.
To understand the role of social isolation in disability, the researchers point to the vicious cycle between the two.
“Whether social isolation is exacerbating disability or disability is exacerbating social isolation,” they said, “the contributing limitations are risk factors” that will worsen a disability that already exists. …Learn More
September 17, 2020
2020 Disability Blogs Tackle Myriad Issues
Squared Away has featured numerous articles this year – the 30th anniversary of the Americans with Disabilities Act – about the challenges that people with disabilities must deal with.
One in four adults in this country has some type of disability. What becomes clear when looking back at this collection of articles is the importance of ensuring that those who are capable of working get the support they need to overcome their unique challenges.
Employment rates, which are lower for people with disabilities, can be improved greatly if they receive support. One recent blog examined a program to assist people with severe intellectual or learning disabilities. The federal-state Vocational Rehabilitation program supplies coaches who help their clients find appropriate work and then smooth the bumps in the employer-employee relationship.
Another program that provides day care to children with disabilities has been effective in keeping their mothers – often single, low-income workers – in the labor force.
The logistical barriers to working are inherently higher for people with disabilities. Yet they are more likely than others to hold low-paying jobs with just-in-time scheduling or shifts that aren’t the same from week to week, according to research covered in an August blog. Imagine arranging special transportation or child care to accommodate these unpredictable schedules.
Economic factors also affect whether people find work or wind up on Social Security disability insurance. Amid the COVID-19 recession, researchers are concerned about the long-term impact of workers with disabilities losing their jobs. During the Great Recession, applications for Social Security disability benefits surged. Once people apply for disability benefits, the odds of ever going back to work decline.
Recessions are also an obstacle for people from low-income families trying to move up the economic ladder. Yet a researcher found that if they can manage to earn more than their parents, they will have more success staying off the disability rolls. One big reason: workers with good jobs and higher incomes are healthier because they can afford better medical care.
Our disability blogs cover research being funded by the U.S. Social Security Administration, which also supports this blog. Here is the complete list of the 2020 headlines:
Same Disability: Some Have Tougher Jobs
Same Arthritis but Some Feel More Pain
Disabilities and the Toll of Irregular Hours
Economy: …Learn More
September 15, 2020
Deep Financial Woes Portend Rent Crisis
The economy shows some signs of improving. More than 1 million people went back to work last month, pushing the unemployment rate down to 8.4 percent.
But housing experts say a sure sign of trouble ahead is the crisis unfolding among the third of U.S. households who are renters. Things can only get worse for them, because so many were already vulnerable prior to the pandemic after many consecutive years of rising rents that strained their budgets.
Prior to the pandemic, Harvard’s Joint Center for Housing Studies estimates that more than 40 percent of U.S. renters paid more than 50 percent of their incomes for rent – far more than is affordable for most workers. And these rent-burdened households aren’t confined to the lower-income brackets; they extend into the middle class.
The end of the federal government’s $600 weekly supplement to unemployment benefits in July will increasingly strain renters too, said Whitney Airgood-Obrycki, a researcher at the center.
COVID-19 and the resulting recession “is piling on top of an existing affordability crisis,” she said.
This gloomy assessment is backed by other evidence that residents of the four largest metropolitan areas – New York, Los Angeles, Chicago, and Houston – are running out of resources and face “serious financial problems,” warns a report by NPR and Harvard’s T.H. Chan School of Public Health.
Over a third of the households in these four cities have already plowed through most or all of their savings to cover rent, mortgages, credit card bills and necessities, raising concerns they will not be able to “weather long-term financial and health effects of the coronavirus outbreak.” The situation is particularly bad for low-income families. …Learn More