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 1, 2020
Economic Opportunity Reduces Disability
Add upward mobility – an individual’s success in surpassing parents’ economic circumstances – to the factors that can keep federal disability payments in check.
A substantial body of academic research has already established that when the economy is growing, unemployed and marginally employed people have better luck on the job market, and their applications for disability insurance start to decline.
But booms and busts aren’t the only influence on disability. A new study finds that economic conditions of a different type – the ability of low-income people to move up the economic ladder – can reduce disability by improving their health. People who earn more money tend to be healthier for a variety of reasons, ranging from access to better medical care to the lower rates of depression and obesity that exist in higher-income populations.
In a recent study, Yale University sociologist Rourke O’Brien used the data from another researcher’s study that mined IRS tax records to find people born in the 1980s to parents whose incomes were at the lower end – the 25th percentile – of the U.S. income distribution. The children were followed into adulthood to see if they earn more or less than their parents did.
It’s very difficult for children in low-income families to improve on their parent’s circumstances, but the odds are better if they grow up in areas with better schools, less inequality, and more two-parent families.
O’Brien’s research found that counties in which young adults earn more, on average, than their parents were less likely to one day report having a disability in U.S. Census surveys and less likely to be receiving disability benefits.
In a more in-depth analysis, the researcher found some evidence that upward mobility also blunts the well-known tendency of rising unemployment to increase disability applications.
Taken together, the findings indicate that whether someone ends up on disability benefits depends, at least in part, on where they grew up. …Learn More
January 2, 2020
States Give Financial Help to Caregivers
On Jan. 1, Arizona residents caring for elderly or disabled family members became eligible for up to a $1,000 reimbursement from the state for expenses incurred in their caregiving responsibilities.
This is a trial program and the legislature allocated very little money – $1 million over two years – in a state with an estimated 800,000 residents caring for a disabled adult over 18.
But it’s a start.
Caregivers “aren’t asking for everything. They’re asking for a little bit to make their lives better,” said Elaine Ryan, vice president of government affairs for AARP, which has been on the forefront of advocating for such policies at the state level. “That’s the least we can do.”
Arizona’s program would defray a portion of caregivers’ spending. For older family members, this would cover technologies to aid older family members, such as hearing aids or computer programs, or shower grab bars and wheelchair ramps.
Like Arizona, state governments around the country, as laboratories for policy experimentation, have passed a hodgepodge of programs to support caregivers. Other bills approved in recent years range from New Jersey’s tax credit for military families caring for wounded veterans to Oregon’s paid family leave program for workers taking care of aging spouses, parents and grandparents.
The programs are a tacit acknowledgment of the enormous financial strain caregivers face – a strain that is only expected to grow and, increasingly, to affect Millennials as their baby boomer parents age.
However, it’s not easy to pass bills that require states to approve financial assistance or tax credits, because the work done quietly by family caregivers is often invisible and under-appreciated by the general public and federal and state legislators. …Learn More
December 12, 2019
Caregiving Disrupts Work, Finances
What do groceries, GPS trackers, and prescription drug copayments have in common?
They are some of the myriad items caregivers may end up paying for to help out an ailing parent or other family member. And these are just the incidentals.
Three out of four caregivers have made changes to their jobs as a result of their caregiving responsibilities, whether going to flex time, working part-time, quitting altogether, or retiring early, according to a Transamerica Institute survey. To ease the financial toll, some caregivers dip into retirement savings or stop their 401(k) contributions. Not surprisingly, caregiving places the most strain on low-income families.
People choose to be caregivers because they feel it’s critically important to help a loved one, said Catherine Collinson, chief executive of the Transamerica Institute.
But, “There’s a cost associated with that and often people don’t think about it,” she said. “Caregiving is not only a huge commitment of time. It can also be a financial risk to the caregiver.”
The big message from Collinson and the other speakers at an MIT symposium last month was: employers and politicians need to acknowledge caregivers’ challenges and start finding effective ways to address them.
Liz O’Donnell was the poster child for disrupted work. As her family’s sole breadwinner, she cobbled together vacation days to care for her mother and father after they were diagnosed with terminal illnesses – ovarian cancer and Alzheimer’s disease – on the same day, July 1, 2014.
Her high-level job gave her the flexibility to work outside the office. But work suffered as she ran from place to place dealing with one urgent medical issue after another. She made business calls from the garden at a hospice, worked while she was at the hospital, and learned to tilt the camera for video conferences so coworkers wouldn’t know she was in her car.
“I felt so alone that summer,” said O’Donnell, who wrote a book about her experience. “We’ve got to do better, and I know we can do better.” …Learn More
June 25, 2019
Moms Help Jobless Sons and Daughters
“Families often serve as the first line of defense against adverse events,” a RAND study starts out.
In this case, the researchers are talking about a mother who protects her unemployed adult child by providing financial assistance, a request that’s not easy for a mother to resist.
RAND researchers Kathryn Edwards and Jeffrey Wenger find that women of all ages are very likely to help out and “significantly alter their behavior” when a son or daughter loses a job.
How much mothers’ sacrifices affect their standard of living are beyond the scope of this study. But although unemployment is at historic lows today, when a child does lose a job, a mother who provides assistance is potentially exposing herself and her husband to financial problems down the road.
The types of the assistance the women in the study provided varied for different groups. The youngest group, working-age mothers between 35 and 62, were the most willing to help an unemployed child, though women of all ages did to some extent.
Mothers employed full-time, and in some cases their partners or husbands, worked more to earn additional money, an option largely closed off to the retired women. Another way working mothers adjusted was to reduce their contributions to employer retirement funds. All of the women also cut their own food budgets for a year or more.
This study is a conservative take on their assistance, because it doesn’t include an indirect, but often costly, source of support that is an obvious solution for unemployed offspring: moving back home. Moving back in will, at minimum, increase their parents’ utility and grocery bills. …Learn More
January 17, 2019
Parent PLUS College Loans Can Spell Peril
A dramatic increase in 1993 in how much parents are permitted to borrow from the federal government for their children’s college is coming home to roost.
Since then, average debt through the parent PLUS loans has more than tripled, adjusted for inflation, according to a Brookings Institution report. About one in 10 parents owe more than $100,000. And as loan balances have ballooned, the rate of repayment has slowed.
Now that the college applications have been submitted, Allan Katz, a financial adviser in Staten Island, New York, has this advice for parents contemplating their next move:
PLUS loans should be avoided “at all cost,” he said. “A big part of my practice is avoiding PLUS loans.”
His dire warning stems from the 1993 change in the law, which made it easier for parents to get into trouble. The reform increased how much parents can borrow from $4,000 per year to whatever the teenager needs to cover his or her school expenses – regardless of the institution’s cost. Total borrowing per child used to be capped at $20,000 – there is no limit today. …Learn More
January 10, 2019
A Social Security Reform for Mom
Created in the 1930s, Social Security’s spousal benefit – it’s half of a retired husband’s benefit – was the way to compensate housewives for the work of raising children.
The world has changed, but Social Security hasn’t been modified to reflect the rise of the full-time, working mother.
Today, married women frequently have earned enough to collect Social Security based on their own employment histories, rather than a spousal benefit. The problem comes when their earnings are reduced – and ultimately their Social Security benefits – because they disrupted their career paths and sacrificed pay raises to care for their children.
Single motherhood has also become very common, which means that a wide swath of women have no access to spousal and survivor benefits at all. Due to a higher divorce rate, one in four first marriages don’t last the full 10 years that Social Security requires to qualify for these benefits.
The erosion of spousal benefits points to a future in which “large numbers of women are going to move through retirement with more disadvantages” than previous generations, concludes a recent report by the Center for Retirement Research.
This problem could be addressed if Social Security gave credit to parents for caregiving. Caregiver credits are already pervasive in Europe, including Austria, Germany, Spain, Sweden, the Netherlands, and the United Kingdom, and they take various forms.
In this country, policy experts have proposed two different approaches to help parents with children under age six by increasing the earnings that dictate the size of their benefit checks. …Learn More