Low-Income Retiree Gets Financial Coach

Every state should have what Delaware has: a program that helps low- and moderate-income seniors find a financial survival strategy.

Stand by me logoSince it opened in 2013, the program, Stand by Me 50+, has connected more than 2,300 older residents – mostly retirees – with federal and state aid programs, advised them of Social Security’s rules, and helped them pay medical bills or eliminate debt. The services are free.

Kathleen Rupert, a financial coach and head of the organization, helped one man in his 70s pay off $13,000 in debt. Another retiree doubled his income from Social Security after she determined that he was eligible for his late wife’s $1,700 benefit. About 44 percent of the program’s clients have monthly income of $1,500 or less.

“We go wherever the need is – to senior housing, senior centers, community centers, libraries,” she said. “We set up appointments at Panera Bread or Hardee’s – wherever they’re available.”

Squared Away interviewed three clients who said the financial solutions they got from the program have given them peace of mind. Here is the first client’s account of how Stand by Me 50+ helped her.

Peggy Grasty with great granddaughters, Aaliyah Gale and Quamiylah Sease.Peggy Grasty with great granddaughters, Aaliyah Gale and Quamiylah Sease.

Peggy Grasty retired in 2010 after two decades at Elwyn, a non-profit social services agency where she was a supervisor and worked with people with mental disabilities. She continues to help people – voluntarily. The 71-year-old takes other retirees under her wing who need assistance because they have trouble walking or aren’t as capable as her.

She initially contacted Stand by Me because she couldn’t make ends meet. She has a comfortable, federally subsidized apartment in Wilmington, Delaware. But her income is limited to a $1,500 Social Security check and a $53 pension from a job long ago waxing floors and driving a bus for a Pennsylvania middle school.

Stand by Me got help for Grasty through two programs: federal SNAP food stamps and a Delaware non-profit that pays low-income residents’ medical bills. By doing this type of work, the program addresses a real need. Although myriad financial assistance programs are available for low-income workers and retirees, they are frequently unaware of the programs, assume they don’t qualify, or may need help navigating the application process. …Learn More

High School Career Courses Keep on Giving

High school classFor young adults who don’t have a college degree, the career-oriented courses they took in high school give them a leg up in the job market. But do the benefits of higher-quality employment after high school continue into middle age?

The first known U.S. study to examine the long-term impact of high school curricula finds that career and technical classes produce workers who, even though they didn’t attend college, are employed at age 50 – even better if they also took Algebra 2 and other college-prep math courses.

To target the students who prepared themselves for better-paying jobs, the courses the researcher counted as career-oriented were business and marketing, health care, agriculture, and computer programming. Amanda Bosky at the University of Wisconsin excluded courses that tracked students into low-wage work like food service and childcare.

Career and technical courses improved the labor market standing of men and women, with subtle differences. For the women, the more career courses they took in high school, the more likely they were to be employed at age 50. The benefits held true regardless of the individual’s innate characteristics, which usually play a role in career success – from scores on standardized math tests to parents’ income.

For 50-year-old men, any amount of career and technical training improved their odds of continued work, according to the analysis, which used a survey of 1982 high school graduates that checked in on them again decades later. The students’ transcripts, detailing their coursework, supplemented the survey.

Although Bosky didn’t examine the types of jobs the older workers were doing, her premise is that it’s better to be employed than not in the years before retiring.

The findings have another important implication. Understanding what it takes for high school graduates to be engaged in the labor force at 50 is crucial at a time secure union jobs are being eliminated and the demands of a technology-based economy have increased. …Learn More

The power of words being typed

Viewing Retirement Saving as a Fresh Start

Employers have learned over the years that understanding employee psychology is critical to getting them to save for retirement. Researchers have landed on a novel idea along those lines: explain to employees that they have an opportunity to save in a 401(k) or increase their 401(k) saving on a future date that represents a fresh start, such as a birthday or the first day of spring.

In a 2021 study in the journal Organizational Behavior and Human Decision Processes, this “fresh start framing” during an experiment increased the percentage of workers who agreed to contribute to their employer retirement plans and increased the share of pay contributed to the plans. In both cases, the increases were well in excess of 25 percent in a comparison with employees who were presented with less salient future dates.

Add this technique to a well-established one that growing numbers of employers already use with some success: automatically enrolling workers in the 401(k), and sometimes automatically increasing their contributions, which research has shown can work better than waiting for them to do it themselves. Most of the retirement plans in the study did not have any automatic features, and the fresh start dates proved another way to elicit better saving habits – voluntarily.

The option to delay a commitment to save is based on an assumption that people are more willing to make a change that involves sacrifice if it can be postponed – smokers often try to quit this way. One theory for using a fresh start date is that it imbues a feeling of optimism, giving employees permission to set aside past failures. …Learn More

Medicare’s Tricky if You’re Employed

Medicare optionsI’m employed (obviously), turning 65 in June, and writing this blog to answer a question that is nagging at me and probably many of our readers in the same situation: do I have to sign up for Medicare, and if so which parts?

No one is actually required to sign up for Medicare. But everyone will need the health insurance eventually and failing to follow the rules can subject retirees to a lifetime of higher premiums.

And that surcharge can be substantial. Medicare adds 10 percent onto the Part B premium for every year a 65-year-old worker who should’ve, under the rules, signed up for the coverage for doctors and medical services but did not. Late enrollment in Part D drug coverage also triggers a penalty. More on the penalties later.

Part A is easy. Go ahead and sign up for Medicare’s Part A hospital coverage if you have employer health insurance, says Richard Chan, chief executive of CoverRight, an insurance broker with a consumer-friendly website. The federal Centers for Medicare and Medicaid Services agrees.

Part A won’t incur a late penalty if you paid your Medicare taxes for 10 years while working, because, in that case, Medicare does not charge a monthly premium – and Part A is added financial protection. “It’s free, and if you go to the hospital, Medicare can help cover the gaps that your work insurance doesn’t,” Chan said.

Eligibility for Part A begins three months before the 65th birthday. A couple of important caveats. People who didn’t put in 10 years of work will pay a fairly large Part A premium. And, under federal tax law, people who sign up for Part A are not allowed to contribute to a Health Savings Account, or HSA, which the government views as a health plan.

Part B is trickier. Older workers who have health insurance from a large employer – 20 or more employees – do not have to sign up for Part B until they retire and give up their employer’s coverage.

However, it’s good practice to confirm with the benefits office that the coverage does, in fact, meet Medicare’s requirement that the employer has at least 20 workers because employers with fewer than 20 employees are subject to completely different rules. And it’s not always clear cut whether the threshold has been met if, for example, the company has contractors or part-time employees.

When you eventually do sign up, you’ll need documentation, which is provided by your employer, to prove to Medicare that you were eligible to defer Part B without penalties. …Learn More

Nursing Home Staffs’ Vax Rates by State

One in four of the more than 900,000 Americans who have died from COVID resided in nursing homes. Yet two years into the pandemic, hesitancy about protective vaccines persists in the facilities in many states.

In January, the Supreme Court upheld a regulation by the Biden administration that required all staff to be vaccinated in long-term care facilities that receive Medicare or Medicaid funding, which is pretty much all of them.

But a newly released rundown of state vaccination rates may not provide much comfort to vulnerable elderly residents and their families living in Ohio, Oklahoma, and Missouri, which rank at the bottom – only about 70 percent of nursing home staff were fully vaccinated as of Jan. 30, according to the Kaiser Family Foundation. The national average was 84 percent.

The highest vaccination rates – 99 percent of staff – were in Massachusetts, Maine, New York, and Rhode Island.

Kaiser’s vaccination rates were calculated based on the staff working in 10,600 U.S. nursing homes who’ve received two doses of the Pfizer or Moderna mRNA vaccines or one shot of Johnson & Johnson’s traditional vaccine. The rates exclude booster shots, which are not part of the federal mandate. The nationwide booster rate for staff, which Kaiser provides separately in its report, is a low 28 percent – the Hawaii, New Mexico and California rates are double that.

A partial reason for the wide range of vaccination coverage is that states have different deadlines for complying with the federal mandate – some were in January and some are in February. But numerous states, including Louisiana, Tennessee, and Virginia, have low vaccination rates because they are, despite the Supreme Court ruling, seeking other legal avenues to challenge the mandate.

The size of a state’s population of people over 65 doesn’t seem to have much bearing on vaccination rates in nursing homes. …Learn More

Adults with Disabilities Cluster in Regions

SSDI Hotspots

When workers develop disabilities on the job, it often has some connection to where they live.

Musculoskeletal conditions like arthritis and tendinitis can happen anywhere but are especially prevalent in a swath surrounding the Kentucky-West Virginia border and running south to Alabama. Intellectual disabilities and mood disorders like autism and depression are common in Vermont, New Hampshire, Massachusetts, and Rhode Island.

The hot spots, described in new research, represent areas that fall in the top 10 percent of all the areas with awards for the specific condition in many of the years studied, 2005 through 2018.

New Hampshire is a dramatic example: all 10 designated areas of the state were identified as hot spots for awards based on mental disorders in all 14 years.

In addition to mental and musculoskeletal conditions, the researchers from Mathematica found a third major hot spot for circulatory and respiratory disorders like heart disease and asthma. These disorders are prevalent in an area that starts in Indiana and Illinois and flows down the Mississippi River to Mississippi.

The explanations for the hot spots are myriad and complex. Musculoskeletal disabilities constitute the largest single type of benefit award – a third of the U.S. total – and hot spots in the Southeast, where coal mining, agriculture and manufacturing are dominant, tend to have older, less educated populations and more veterans. …Learn More

Retirees with Pensions Slower to Spend 401k

Retirees have long been reluctant to spend the money they’ve accumulated in their 401(k) savings plans. But it also used to be common for retirees to have a traditional pension to cover their regular expenses.

By the time the baby boomers came along, pensions were available to a dwindling minority of workers, and it isn’t entirely clear how much they’ll tap into their 401(k)s.

A new study quantifies the impact of this transformation in the U.S. retirement system, where traditional pensions are now found almost exclusively in the public sector. The conclusion, by the Center for Retirement Research, is that retired boomer households lacking a pension seem more likely to rapidly deplete the 401(k) savings they rely on, “leaving them with more risk that they will outlive their savings.”

Consider a simple example of the difference a pension makes. In the past, typical households that started retirement with a pension and $200,000 in 401(k)s and other financial assets had about $28,000 more at age 70 than their counterparts with $200,000 in assets but no pension. After age 75, the difference between the haves and have-nots widened to about $86,000.

For this analysis, the researchers used data on the retirement finances provided in a survey of older Americans, specifically the heads of households born between 1924 and 1953, which includes some of the earliest boomers.

The researchers also found that the pace at which these retirees spent their savings hinged on the percentage of wealth they held in the form of annuities, whether a pension, Social Security, or an insurance company annuity. The retirees who got more of their income from annuities depleted their savings more slowly.

Based on prior generations’ behavior, the researchers roughly estimated that boomers – given their lower pension coverage – are in danger of using up their financial assets at around age 85. This would leave them with little room in their budgets for a long life, a large unexpected medical bill, or an inheritance for their children.

Boomers probably shouldn’t assume then that their parents’ retirement experiences are a reliable indication of how they will fare.

To read this study, authored by Robert Siliciano and Gal Wettstein, see “Can the Drawdown Patterns of Earlier Cohorts Help Predict Boomers’ Behavior?”Learn More