June 4, 2019
Husbands Ignore Future Widow’s Needs
The amount of money a widow receives from Social Security can mean the difference between comfort and hardship.
Husbands have a lot of control over how this will turn out. Each additional year they postpone collecting their own Social Security adds another 7.3 percent to the amount a future widow will receive every month from the program’s survivor benefit.
But husbands can be a stubborn lot.
Previous research has shown that a large minority fail to take their wives into account when deciding to start their Social Security. A new study confirms this in an online experiment designed to raise husbands’ awareness of the financial impact their claiming age could have on a spouse. The men’s ages ranged from 45 to 62.
In the experiment, the researchers displayed Social Security’s benefit information to the men three different ways. In the first format, a control group saw the basic information: the husband’s full retirement benefit, and then a link to a second page displaying his benefits for various claiming ages. A second format also displayed his full benefit, but the link went to a page with estimates of his widow’s survivor benefits, based on the husband’s various claiming ages – the later he files, the more she would receive. The third format had the same information as the second format, but it was presented on a single web page.
Regardless of the way the survivor benefits were displayed, the men weren’t persuaded to postpone their own benefits to one day help their widows. Potential explanations include their feelings about work, existing health issues, and whether they will get a defined benefit pension from an employer.
Whatever their motivation, simply educating husbands on the financial impact of choosing a claiming age “is unlikely to improve widows’ economic outcomes,” concluded the study by the Center for Retirement Research at Boston College.
The impact of widowhood is often significant. An average widow’s total income drops 35 percent when a husband passes away, the researchers estimated from financial data for married men who had retired. The earlier the husband had started his benefits, the larger the drop in the widow’s income after the couple’s second Social Security check stops coming in. …Learn More
May 16, 2019
Social, Economic Inequities Grow with Age
Retirement, as portrayed in TV commercials, is the time to indulge a passion, whether tennis, enjoying more time with a spouse, frequent socializing, or civic engagement.
Boston University sociologist Deborah Carr isn’t buying this idealized picture of aging.
“This gilded existence is not within the grasp of all older adults,” she argues in “Golden Years? Social Inequality in Later Life.” “For those on the lower rungs of the ladder,” she writes, retirement is “marked by daily struggle, physical health challenges and economic scarcity.”
Her book, which mines multidisciplinary research on aging, reaches the distressing conclusion that economic inequality not only exists but that it becomes more pronounced as people age and become vulnerable. And this problem will grow and affect more people as the population gets older.
Poverty has actually declined among retirees since the 1960s. But by every measure – health, money, social and family relationships, mental well-being – seniors who have a lower socioeconomic status are at a big disadvantage. They have more financial problems, which creates stress, and they are more isolated and die younger.
Throughout the book, Carr documents the myriad ways the disparities, which begin at birth, reinforce each other as people grow up and grow old.
“Advantage begets further advantage, and disadvantage begets further disadvantage,” Carr concludes. For the less fortunate, “old age can be the worst of times,” she said. …Learn More
February 19, 2019
Tweaking Social Security for the Future
Social Security remains as vital today as it was after its 1935 passage. But advocates for the nation’s most vulnerable retirees have proposed ways to enhance their benefits.
Consider the minimum benefit. Put on the books in the early 1970s, its goal was to prevent poverty among retirees who had worked for decades in low-paying jobs. The benefit’s value has diminished due to a design flaw that rendered it largely ineffective.
A recent policy brief by the Center for Retirement Research analyzed various modest proposals to increase the minimum benefit and improve low-income retirees’ financial security.
This brief was the last in a series on modernizing Social Security. The relatively low cost of these proposals, many of which have bipartisan support, could be offset by benefit reductions for less-vulnerable retirees. The House of Representatives is planning hearings later this year looking into ways benefits might be enhanced.
The following are synopses of the policy problems and proposals discussed in the other briefs and covered in previous blogs: …Learn More
December 13, 2018
Reducing Poverty for Our Oldest Retirees
With more Americans today living into their 80s and beyond, the elderly are becoming more vulnerable to slipping into poverty.
To reduce the poverty risk facing the oldest retirees, some policy experts have proposed increasing Social Security benefits for everyone at age 85. Under one common proposal analyzed by the Center for Retirement Research in a new report, the current benefit at this age would increase by
The poverty rate for people over 85 is 12 percent, compared with 8 percent for new retirees. But more elderly people may actually be living on the edge, because the income levels that define poverty for them are so low: less than $11,757 for a single person and less than $14,817 for couples.
One reason the oldest retirees are especially vulnerable is that their medical expenses are rising as their health is deteriorating, yet they’re too old to defray the expense by working. This is occurring at the same time that the value of their employer pensions – if they have one – has been severely eroded by inflation after many years of retirement.
Further, elderly women are more likely to be poor than men, because wives usually outlive their husbands, which triggers a big drop in income that is generally not fully offset by a drop in their expenses.
Limiting the 5 percent benefit increase to the oldest retirees would ease poverty while containing the cost. …Learn More
July 31, 2018
Financial Data Brokers Have You Pegged
In the world of Big Data, do you fall into the industry’s Extra Needy category, or are you viewed as American Royalty? Perhaps Ethnic Second City Struggler or Small Town Shallow Pockets is a more apt description of you? Or how about Eager Senior Buyer or Tough Start: Young Single Parent?
While the media are focused on Facebook’s privacy breaches, a growing multibillion-dollar industry of data brokers is mining personal information online in order to sell our data dossiers to financial and other companies – sometimes to the detriment of our personal finances.
Big Data collection also can be innocuous, when it is used for marketing. In this form, it’s just the high-tech version of snail mail solicitations for credit cards, retail catalogs, or the services of a neighborhood real estate agent.
But Pam Dixon, the executive director of the World Privacy Forum, said evidence is growing that some consumers are being exploited by the unfettered sharing of personal data. Further, individuals generally do not have a legal right to see their dossiers, which are proprietary – “and we don’t know what they’re being used for,” she said.
In one egregious case, brokers sold data on an elderly veteran, who was then victimized by a scam that stripped him of his life savings. Some brokers compile lists of people living in trailer parks to sell to companies making “predatory offers to those in financial trouble,” Dixon testified before the Senate. …Learn More
June 21, 2018
Despite Medicare, Medical Expenses Bite
Medicare pays for the bulk of the medical care for Americans over 65, but a lot of their income is still eaten up by medical expenses.
The list of expenses is long. The lion’s share goes toward various insurance premiums – for Medicare Part B coverage, Part D prescription drug coverage, and supplemental insurance, whether Medigap, a Medicare Advantage plan, or employer health insurance for retirees. The remaining costs, for copayments and deductibles, are also significant.
These out-of-pocket costs, when added together, averaged about $4,300 annually per person, finds a new study by researchers Melissa McInerney, Matthew Rutledge, and Sara Ellen King of the Center for Retirement Research.
Out-of-pocket costs consume a third of the amount that retirees receive from Social Security, which is the most significant source of retirement income for a wide swath of the nation’s seniors, including many people in the middle-class. Half of seniors get at least half of all their income from the federal program.
The Medicare Part D prescription drug program has given some relief to retirees. After it became effective in 2006, the share of seniors’ income consumed by out-of-pocket costs declined slightly and then declined again after a follow-up reform of Part D began to close a big gap in drug coverage – known as the donut hole – in 2010. …Learn More
June 12, 2018
Luck – or a Deliberate Path to Wealth
It’s usually not talent or street smarts or brains that make people wealthy and comfortable. It’s the luck of having rich parents.
But there is another way to get there, one that is within reach: becoming the first generation in the family to earn a college degree.
A new study by the Federal Reserve Bank of St. Louis, using the latest federal data on household finances, measures the impact of having that degree – or not having one – on wealth and income.
Although the ranks of college-educated Americans have grown over the past quarter century, people lacking a degree still make up a substantial majority – two out of three Americans. …Learn More