March 21, 2023

It’s been well documented that the COVID recession and layoffs in 2020 were particularly hard on Black, Hispanic, and Latino Americans. But if they had a disabling physical and medical condition, they felt it much more.

In a new study examining the cumulative impact of having a disability combined with the disadvantages of being an older minority worker or retiree,  the racial disparities were apparent on a variety of fronts – in the inability to pay for essentials, at work, and through some difficulty obtaining medical care.

Past research has shown that once the pandemic hit, people with disabilities, who tend to have lower incomes, had an even tougher time financially than in the years prior to COVID. The racial aspect of these hardships was explored in this new research, as dramatized by the difficulty some Black, Hispanic, and Latino people with disabilities had paying their rent or mortgage.

During the height of the pandemic in 2020, paying for housing was a problem for about 13 percent of them. That was about four times the rate for Whites with disabilities and was also a much bigger issue than Blacks, Hispanics, or Latinos without disabilities faced.

Racial differences were also evident when people of color with disabilities tried to buy another essential: groceries. One in five said they couldn’t afford all the food they needed – roughly three times the rate for Whites with disabilities and about twice the rate for Hispanics, Latinos and Blacks without disabilities. …Learn More

March 7, 2023

It’s not unusual for Black and Latino children to live with their grandparents, who are either the primary caregivers or members of a multigenerational family.

And just as the grandparent is integral to the family unit, so are the Social Security benefits the grandparent receives and contributes to the household. The poverty rates in families with children would be much higher without the income from Social Security, according to new research on Wisconsin families.

Nearly two-thirds of the study’s families in which a grandparent is a child’s primary caregiver rely on Social Security retirement benefits, disability benefits, or the Supplemental Security Income program (SSI), which makes small cash payments to low-income retirees and the disabled.

Just under half of the three-generation households that include a grandparent get some income from Social Security.

The University of Wisconsin researchers confined their study to low-income families who are participating in state-run safety net programs such as food stamps, Medicaid, child support, and a caretaker supplement. They used state government data to draw a detailed picture of the grandparent families, whose income in 2019 ranged from about $33,000 when the grandparents are caregivers to $40,000 in multigenerational families. The families are more likely to be Black, Latino, and, in the case of three-generation families, Asian. The vast majority of the heads of household are women and frequently urban dwellers.

But the reason for the grandparents’ involvement and the importance of their financial support are different in each situation. Grandparents tend to be caregivers when the child’s parents are incarcerated, have substance abuse or mental health issues, or have died. These grandparents are a crucial, or the sole, source of financial support.

In three-generation households, they support the child’s parent or parents financially. But the working adults’ earnings are by far the most important source of family income. …Learn More

February 9, 2023

About one out of every five Latinx workers in this country lacks health insurance. The uninsured ratio rises to one in four in the states that have chosen not to expand their Medicaid programs to more low-income workers under the Affordable Care Act.

The motivation for Josefina Flores Morales’ new research is that there’s more to health insurance than just medical care. It is also critical to individuals’ financial health, she argues, and broader insurance coverage in the Latinx community is an underappreciated way that the vast wealth gap between them and non-Latinx White workers could be reduced.

Having insurance keeps people healthy so they can continue to work and is important for other financial reasons. Insurance reduces the size of medical bills through caps on out-of-pocket costs and limits on how much doctors and hospitals can charge for their services.

In cases of severe illness, insurance can prevent a cascade of financial problems resulting in bankruptcy, a car repossession, or home foreclosure.

Flores Morales, a postdoctoral scholar at Stanford University’s School of Medicine, attempts to put a dollar value on the health insurance disparity by measuring the gap between Latinx and non-Latinx White household wealth – and then estimating whether broadening coverage under the 2014 Medicaid expansion reduced that gap. Her analysis takes advantage of the key difference – each group’s uninsured rates in each state – after Congress expanded the joint federal-state Medicaid program as part of the Affordable Care Act.

In the states that agreed to expand their programs, the Affordable Care Act began covering millions more low-income workers by increasing the income limit for people who qualify.

Based on the known impact that broader insurance coverage and the Medicaid expansion have had so far on the wealth gap between Latinx and White households, the researcher found that if both groups had the same, lower uninsured rate, the gap would shrink by about 8 percent. Flores Morales limited her analysis to the households that have positive net worth, meaning their assets exceeded their debts. …Learn More

Behavior

February 7, 2023

A popularized image of parents who struggle when adult children move back home is not shaping up as an accurate picture of the arrangements.

Unemployment, divorce, college graduation – adult children in their 20s and 30s move back into a parent’s home for many reasons. And the parents can have all sorts of reactions, good and bad, to their boomeranging kids.

Some parents get stressed out by young adults who return home because they need financial support. Others welcome having the kids back to pad the empty nest, help with household chores, or help pay the bills.

The return home isn’t necessarily a one-time thing either. “As they attempt to gain financial independence, adult children may alternate between living on their own and living with parents,” according to a new study of parents in their 50s and 60s. …Learn More

January 5, 2023

As the lower-paid sex, women have no shortage of insecurities about their retirement finances.

Only one in five working women feels “very confident” of being able to retire comfortably, the Transamerica Center for Retirement Studies reports in its annual retirement survey. More than half say they don’t earn enough or have too much debt to leave a lot of room for saving. Four in 10 expect to retire after 70 or not at all.

These insecurities probably reflect, to some extent, the poor retirement preparedness of Americans as a whole, not just women. In fact, women have made significant strides over the past half century. A new study documenting their personal and economic progress since the 1970s finds that their financial standing, compared with men, has improved.

Granted, women are still a long way from pay parity. But the improvements in retirement preparedness are impressive because they occurred despite the fact that women have become more independent – they are more likely to be living on their own and supporting themselves. Roughly two-thirds of boomer women born after 1953 either have never married or have been divorced for some part of their adult lives, according to the Center for Retirement Research.

What undergirds their personal and financial independence are college degrees and women’s growing participation in the labor force over five decades.

One in three baby boomer women born in the mid-1950s through the mid-1960s has a college degree – twice that of their mothers who were born during the Great Depression. Armed with the degrees, young boomer women flooded into the labor force. Three-fourths were working between their mid-30s and mid-40s, compared with 57 percent employment in the Depression-era cohort at that age. Men’s labor force participation has been much higher historically but barely changes over time.

Black women have always worked more than White women. But they too increased their labor force participation as they gained more education.

So how has women’s robust participation in the work world bolstered their financial security? …Learn More

On the Web

January 3, 2023

Older Americans who want to be smart about retirement finances are curious about the intricacies of Social Security.

The blog that drew the most traffic from our readers last year – “The Bridge to a Larger Social Security Check” – suggested a strategy for getting more out of the program: delay signing up for Social Security by withdrawing savings from a 401(k) to pay the bills.

Each year that Social Security is postponed adds 7 percent to 8 percent to a retiree’s monthly benefit check. A couple of years of delay, funded with savings, can provide significantly more money, month after month, to pay the bills. The researchers concluded from an experiment that asked older workers to consider the delay strategy that a substantial minority “are interested in a bridge option despite its unfamiliarity.”

Another popular blog last year was about an experiment involving another unfamiliar concept fundamental to the program: the Retirement Earnings Test. In “Explaining Social Security’s Earnings Test,” readers learned that any reduction in benefits that occurs if they simultaneously work and collect the benefit in their early to mid-60s is not a tax.

Instead, under Social Security’s rules, some of an older worker’s benefits may be deferred. The benefits are incrementally added back into his monthly checks after he reaches his full retirement age under the program. Understanding that the reduction in benefits is a deferral, rather than an outright cut, is an important aspect of the program that is increasingly important for older workers looking for strategies to improve their standard of living in retirement.

If delaying Social Security is good for older workers’ financial security, the article “COVID’s Impact on Social Security Claiming” delivered a little good news. The generous, extended unemployment benefits approved by Congress made it easier for older workers who lost their jobs during the 2020 spike in unemployment to remain in the labor force rather than sign up early for their benefits and lock in a smaller monthly check.

This positive pandemic trend was a stark contrast to the Great Recession. During months of protracted unemployment following the 2008 financial crisis, jobless older workers became more likely to resort to signing up for Social Security because they needed income.

One aspect of retiring and aging that can really throw a wrench in financial planning is medical costs. In “A Start on Estimating Retiree Medical Costs,” the researcher estimates that retirees with average healthcare needs must cover about 22 percent of their total out-of-pocket costs, excluding premiums, or just over $67,000 in total over their remaining lives. Retirees needing high levels of care can spend twice as much.

Another unknown: long-term care. A study covered in “Spouse in Nursing Home Raises Poverty Risk” finds that one in three married people in their early 70s is likely to have a spouse who will eventually wind up in a nursing home. Not all nursing home stays are for an extended period of time. But if an unlucky spouse does have a long stay, the couple is significantly more likely to become impoverished while paying for the care.

Other popular blog topics in 2022 included Medicare, work, and profiles of individual retirees: …Learn More

Behavior

December 13, 2022

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