Posts Tagged "baby boomers"

Does Retiring Cause Memory Loss?

After four or five decades of work, retirement is liberating! It’s gonna be great! Right?

Well, not necessarily. It depends on how you retire.

In this video, Ross Andel, director of the School of Aging Studies at the University of South Florida, warns that a risk to retiring is that it can “speed up the aging of our brain. It could make us slower and more forgetful.”

His research demonstrates how work and retirement influence brain functioning. He tested the memories of people in their early 60s living in Canberra, Australia. Every four years, they were asked to remember as many random and unrelated words in a list as they could.

Naturally, they couldn’t remember as many words at 74 as at 62. “This is quite normal,” he said.

More interesting was what Andel found when he separated the test results for the retirees from the results for the older individuals who were still working. The decline in memory was almost exclusively among the retirees.

“Something seems to happen around the time of retirement to make people more forgetful,” he said.

Andel isn’t recommending that you work until you drop. He does provide a roadmap for limiting memory loss so you can enjoy retirement.

To find out what he has in mind, you’ll have to watch the video. …Learn More

Beware of scam

Cognitive Decline Meets COVID-19 Scams

The federal government warns that older Americans are being targeted by a battery of financial scams, including telemarketers offering to do contact tracing – for a fee – or to reserve a slot for a future vaccine. Others are soliciting donations to charities purportedly helping people in need during the economic slowdown.

COVID-19 makes this a perilous time for people struggling with cognitive decline.

Few can escape a deterioration in their cognitive capacity as they age. It’s just a matter of degree and speed. But the faster it happens, the more damage it can do, the FINRA Investor Education Foundation concluded in a new study.

The study was based on surveys of more than 1,000 older residents in Chicago retirement communities and subsidized housing – average age, 80. The same people were periodically asked questions with varying degrees of difficulty about their general financial knowledge and investments and were asked to compare and calculate percentages.

The older people who either initially had less understanding of financial concepts or experienced a faster decline in their knowledge made poorer financial decisions in exercises that simulated real-world decisions.

This included a vulnerability to scams, which was assessed by asking the older people to agree or disagree with statements like this: “If a telemarketer calls me, I usually listen to what they have to say.” (Not recommended.) And this: “If something sounds too good to be true, it usually is” (Count on it.)

To prevent scams, older people – and their caregivers – need to anticipate the financial damage that cognitive decline can cause. …Learn More

Pandemic Puts More Retirements at Risk

Worsening Retirement Outlook figureAmericans’ retirement outlook has gone from bleak to bleaker.

The unemployment caused by COVID-19 has pushed up the share of working-age households not able to afford their current standard of living in retirement from 50 percent to 55 percent, according to a new analysis by the Center for Retirement Research, which sponsors this blog.

The analysis updates a previous estimate, based on 2016 data, to include the harmful effects of surging unemployment. The researchers estimate that perhaps 30 percent of workers – far more than is reflected in the monthly jobless rate – could be affected by layoffs now and in the future. They did not factor in the recession’s impact on the housing and financial markets, which could make things worse.

Unemployment hurts retirement in a variety of ways. Laid-off workers’ paychecks vanish immediately, but they may also earn less in the next job. The depressed earnings, over months or years, reduce the money flowing into their 401(k)s, and the amount they’ll receive in pensions and future Social Security benefits. It may also force some to spend down savings that, had they not lost their jobs, would’ve been preserved for retirement.

Interestingly, the impact on low-income workers is mixed. In one way, they’re protected by Social Security’s progressive benefit formula, which will replace a higher percentage of their earnings as their lifetime earnings decline. But low-income workers have had more layoffs, which widens the gap in their retirement savings – between what they can save and what they should be saving – more than for higher-income people.

The 2020 recession will impact retirement “in a very different way” than the Great Recession, the researchers said. This time, “the destruction is occurring more through widespread unemployment and less through a collapse in the value of financial assets and housing.” However, the lessons of the previous recession can’t be dismissed either. …Learn More

Crowd of people

Readers Lament Decline in Boomer Health

The share of people in their late 50s with the second most severe form of obesity has tripled since the early 1990s. This grim fact, featured in a recent Squared Away article, clarifies COVID-19’s danger to older Americans.

The article, “Our Parents Were Healthier at Ages 54-60,” summarized research establishing that baby boomers are less healthy than their parents’ generation due to several conditions related to obesity, including diabetes, pain levels, and difficulty performing daily activities. The poorest Americans’ health deteriorated the fastest – and COVID-19 is preying on them.

“This decline in markers of metabolic health seems to correlate with increased vulnerability to the pandemic,” wrote one reader, Dan O’Brien, who was among several who commented on recent health-related blogs.

That’s what happened during the H1N1 flu pandemic in 2009. Hospitalizations – and possibly death rates – were tied to obesity in adults with multiple health conditions, according to the National Institutes of Health.

“The vast majority of [COVID-19 patients] who reach the ICU suffer from comorbidities. My takeaway is that metabolic dysfunction is tied to immune-system failure in ways we don’t yet understand,” O’Brien said.

Another reader, Lorraine Porto, advocated a simple way for people to keep their weight in check: walk. An elderly woman she knows “walked miles every week.” Porto believes this healthy habit saved the woman’s life when she broke her hip in her 80s and was “walking around, sprightly as ever, less than two months later.” The woman lived into her 90s, Porto said.

A second health-related blog popular with readers looked at the unexpected costs of treating medical conditions that become more common in old age.

Older workers and retirees who try to anticipate their future medical expenses might feel a bit like they’re throwing a dart at a dartboard. The researchers did the work for them in a study described in the blog, “Unexpected Retirement Costs Can be Big.” …Learn More

Lost Wealth Today vs the Great Recession

For older workers starting to think about retiring, the economic maelstrom the coronavirus set in motion is a reminder of that sinking feeling they experienced just over a decade ago.

In 2008, the stock market plunged nearly 40 percent, accelerating the steep decline that was underway in U.S. house prices. The unfolding 2020 recession is playing out differently. But both downturns have one thing in common: Social Security as a stabilizing influence on older workers’ retirement finances.

Baby Boomers lost wealthA 2011 study of the change in baby boomers’ finances during the Great Recession found that total wealth dipped by 2.8 percent, on average, between 2006 and 2010 for households between ages 51 and 56.

The 2.8 percent decline in wealth at the time was a significant setback for baby boomers. In more normal times, earlier generations had increased their wealth by 3 percent to 8 percent at comparable ages.

Nevertheless, things could have been so much worse for baby boomers were it not for the substantial wealth they had built up over several decades in their future Social Security benefits – an amount that is unaffected by the collapse of financial and housing markets. The average value of these future Social Security benefits was 30 percent of boomers’ wealth.

Wealth in the study also included home equity and retirement plan accounts.

This time around, it’s too early to determine the severity of the downturn’s effects on older workers. Unlike the previous recession, though, this one has had little impact on house prices so far, and the stock market, after sinking in March, has regained about half of its losses thanks to aggressive action by the Federal Reserve.

The major worry is unemployment. The jobless rate approached 15 percent in March – well above the 2009 peak of 10 percent – and economists expect it to keep rising.

But, in any recession, Social Security is a stabilizing force. Today, it represents a large share of older workers’ wealth just as it did a decade ago. And lower- and middle-income workers’ benefits are a much larger share of wealth, because they are far less likely to have substantial assets in 401(k)s. …Learn More

Social Security sign

Social Security Tapped More in Downturn

It happened after the 2001 and 2008-2009 recessions, and it will happen again. Some older workers who lose their jobs will turn, in desperation, to a ready source of cash: Social Security.

In the wake of a stock market crash like the one we just experienced, baby boomers’ first inclination will be to remain employed a few more years to make up some of the investment losses in their 401(k)s. But as the economy slows and layoffs mount, that may not be an option for many of the unemployed boomers, who will need to get income wherever they can find it.

Age 62 is the earliest that Social Security allows workers to start their retirement benefits. In 2009, one year after the stock market plummeted, 42.4 percent of 62-year-olds signed up for their benefits, up sharply from 37.6 percent in 2008, according to the Center for Retirement Research (CRR).

Social Security is a critical source of income even in good times. One out of two retirees receives half of their income from the program, and they can also count on it when times get tough.

But the financial cost of starting Social Security prematurely is steep, because it locks in a smaller monthly benefit for the rest of the retiree’s life. For those who can wait, the size of the monthly check increases an average 7 percent to 8 percent per year for each year claiming is delayed up until age 70.

Unfortunately, the people who claimed Social Security early in the wake of the 2001 recession had fewer financial resources to begin with – namely, their earnings were lower, they had less wealth, and they were less likely to have a spouse to fall back on – according to the CRR study.

“These simple characteristics suggest that those hardest hit by recessions are most likely to use Social Security as an income-insurance policy,” the researchers concluded. …Learn More

Art of someone gaining weight

Our Parents Were Healthier at Ages 54-60

Baby boomers aren’t as healthy as their parents were at the same age.

This sobering finding comes out of a RAND study that took a series of snapshots over a 24-year period of the health status of Americans when they were between the ages of 54 and 60.

The researchers found that overall health has deteriorated in this age group, and they identified the specific conditions that are getting worse, including diabetes, pain levels, and difficulty performing routine daily activities.

Obesity is an overarching problem: the share of people in this age group with class II obesity, which puts them at very high risk of diabetes, tripled to 15 percent between 1992 and 2016.

In addition to declining health, the study for the Retirement and Disability Research Consortium uncovered strong evidence of growing health disparities among 54 to 60-year-olds: the poorest people are getting sicker faster than people with more wealth.

The increase in women’s pain levels has been starkest over the past 24 years. The wealthiest women have seen an increase of 6 percentage points in the share experiencing moderate to severe pain from conditions like joint or back pain. But the poorest women saw a 21-point leap. The disparity for men was also large: up 7 points for the wealthiest men versus 15 points for the poorest men.

The bottom line: today’s 54 to 60-year-olds are not as healthy as their parents were, and the study suggests that the disparities between rich and poor will continue to grow.

To read this study, authored by Peter Hudomiet, Michael D. Hurd, and Susann Rohwedder, see “Trends in Health and Mortality in the United States.”Learn More