Posts Tagged "retired"
April 1, 2021
What the Research Can Tell us about Retiring
It’s difficult to envision what life will look like on the other side of the consequential decision to retire.
But research can help demystify what lies ahead – about the decision itself, the financial challenges, and even the taxes. Readers understand this, as evidenced by the most popular blog posts in the first three months of the year.
Here are the highlights:
The retirement decision. The article, “Retirement Ages Geared to Life Expectancy,” attracted the most reader traffic. Myriad considerations go into a decision to retire. But a sense of whether one might live a long time – because of good health or simply seeing that parents or neighbors are living unusually long – is a compelling reason to postpone retirement either to remain active or to build up one’s finances to fund a longer retirement.
A recent study found that as men’s life spans have increased, they have responded by remaining in the labor force longer, especially in areas of the country with strong job markets and more opportunity. This is also true, though to a lesser extent, for working women.
The planning. The second most popular blog was, “Big Picture Helps with Retirement Finances.” It described the success researchers have had with an online tool they designed, which shows older workers the impact on their retirement income of various decisions. When participants in the experiment selected when to start Social Security or how to withdraw 401(k) funds, the tool estimated their total retirement income. If they changed their minds, the income estimate would change.
The tool isn’t sold commercially. But it’s encouraging that researchers are looking for real-world solutions to the financial planning problem, since the insights from experiments like these often make their way into the online tools that are available to everyone.
The taxes. It’s common for a worker’s income to drop after retiring. So the good news shouldn’t be surprising in a study highlighted in a recent blog, “How Much Will Your Retirement Taxes Be?” Four out of five retired households pay little or no federal and state income taxes, the researchers found. But taxes are an important consideration for retirees who have saved substantial sums. …Learn More
May 9, 2019
ROMEOs: Retired Old Men Eating Out
Every Thursday morning, five, six, seven of them meet for a hearty breakfast and freewheeling conversation at the Sunrise Bistro in Summerville, South Carolina.
The retirees’ talk careens from Tammany Hall and texting while driving to their military experiences and the aches and pains of old age. Several of the men had technical careers, so they recently dived deep into analyzing why a Coast Guard cutter carrying Zulu royalty crashed into a New Orleans dock.
“We talk about man things,” said Bob Orenstein, an 83-year-old Korean War veteran who is retired from a Wall Street computer firm. “Men are mainly loners frankly, but everybody has found something to identify with in the group.”
The truth is that the ROMEOs – retired old men eating out – get much more than that from their weekly assemblies. “I think it’s just the friendship, the camaraderie,” said Paul Brustowicz, 74, a former jack-of-all-trades for an insurance company.
Friendship is the best antidote to isolation, which is dangerous for older Americans because it can lead to depression, poor health habits, and other problems. Most of the men in the breakfast club are South Carolina transplants, and their meetings have led to socializing and phone calls outside the group. Two of the men go deep-sea fishing together for redfish, and others share memories of growing up in New York or the tricks of the trade for constructing sailboat and railroad models. …Learn More
May 7, 2019
Social Security Benefits Stump Workers
A majority of workers do not know a crucial piece of information about their retirement: how much married couples can expect to receive from Social Security.
A previous blog covering the same survey reported on workers’ poor knowledge of the survivor benefit for widows. This blog focuses on the other benefit for couples: the spousal benefit.
Social Security works a little differently for a married couple than for a single worker, whose future benefit check will simply be determined by his or her earnings history.
For the highest-earning spouse in a working couple – usually the husband – the size of his monthly check is also based on his past earnings. But his wife’s benefit is complicated. If she didn’t work, the rules entitle her to a spousal benefit equal to half of her retired husband’s benefit. If she did work, her benefit is based on her work history – with an exception. If her benefit is less than half of her husband’s, Social Security increases her monthly check to half of his check.
Only one in three of the people surveyed understood how this works, probably partly because of the complexity.
Most workers also had misconceptions about other aspects of the program. For example, only about one in four knew that a couple must be married for more than a year for the lower-paid person to receive the spousal benefit. If a couple has divorced, the lower-earning ex-spouse gets the spousal benefit only if the marriage lasted more than 10 years. Again, just one in four workers knew this important rule.
Couples of all ages should know the rules about a program they will rely on – no retirement plan is complete without this information. …Learn More
April 18, 2019
Know the Social Security Survivor Benefit
My divorced aunt did not work while she was raising eight children. After her former husband died, she was pleasantly surprised to learn she could start collecting his Social Security.
She has a lot of company. Nearly two out of three men and women in a new survey by RAND were unaware of this rule: a divorced person who was married for at least 10 years is entitled to the deceased spouses’s survivor benefit. In fact, she would even get the benefit if he remarried.
In the case of couples who were still married when the spouse died, the marriage had to last only nine months for the survivor to get the benefit. Fewer than half of the people surveyed by the RAND researchers were aware of this rule.
The responses were no more impressive for some of the other questions about Social Security’s survivor benefit. This benefit is based on the higher-earning spouse’s work record – typically the husband. Even a wife who used to work and is collecting Social Security based on her work record is eligible to switch to her husband’s benefit after he dies – if his check is larger than hers.
To make the switch in this particular case, the widow must file with the Social Security Administration either online or at a local office. (However, if the wife never worked and is at retirement age, she will automatically start receiving her late-husband’s check.)
Unmarried partners sometimes operate under a misconception too: three out of four think, incorrectly, either that unmarried people can get the survivor benefit, or they don’t know.
One thing to note about this study is that Americans of all ages were surveyed, and it is not surprising that young adults would have little knowledge of program benefits intended for widows. But age doesn’t seem to bring wisdom: the results were equally dismal in a similar earlier survey of individuals who were at least 50 years old.
April is National Social Security Month. Couples should celebrate by learning more about how Social Security works – it’s critical to a widow’s standard of living. …Learn More
November 27, 2018
Senior Housing Shortage is Getting Worse
Nearly 10 million seniors are having difficulty paying for housing – and the problem is growing.
Housing experts typically recommend that people keep their housing costs below a third of their income. But one in three Americans over age 65 are spending more than that on their rent or mortgage payment, utilities, property insurance, maintenance, and other housing costs, according to a new study, “Housing America’s Older Adults,” by Harvard’s Joint Center for Housing Studies.
If the senior housing problem hasn’t reached crisis proportions yet, Jennifer Molinsky, who wrote the center’s report, predicted that it will if nothing is done to increase the supply of housing structures that are both affordable and age-friendly to meet the needs of aging baby boomers. The number of households over 80 will more than double over the next 20 years, the housing center estimates.
“Unless we create more options for people at the middle- and lower-income levels, we are going to be seeing that people have fewer choices and that they’re forced into options they don’t want,” she said. …Learn More
October 18, 2018
How Retirees Can Negotiate Drug Prices
A Squared Away reader wrote recently that he and his wife saved $2,400 a year by paying cash for their medications.
When a pharmacy sells a prescription drug to a customer, the health insurer reimburses the pharmacy at a negotiated rate that covers its cost for the drug, its dispensing fees, and any additional markup. It’s often the case that a patient’s copayment exceeds the pharmacy’s reimbursement, resulting in an overcharge in the copayment. More than one in four copayments were overcharges in a March analysis in the Journal of the American Medical Association of some 4,000 outpatient drugs and
9 million insurance claims by people of all ages.
We asked Mohamed A. Jalloh in Napa, California, to guide consumers on how to reduce their costs. He is a pharmacist, assistant professor at the Touro University California College of Pharmacy, and a spokesman for the American Pharmacists Association.
Question: How can retirees access their option to pay a cash price for a prescription if it is lower than their Part D or Medicare Advantage plan copayment?
Jalloh: The big picture is that elderly patients should work with a pharmacist to see if they can get a better deal. If you process a prescription through your insurance – whether under an employer’s health insurance or Medicare drug coverage – the price may be higher than paying straight cash for the medication. Anyone can do this. But I imagine it helps seniors the most because they’re the ones taking the most medications.
The key is to ask the pharmacist to go over your medications with you. Do a medication check-up once a year. That’s the best time to see if a pharmacist can get a better deal for you.
Q. Is it common practice to negotiate a cash price?
Jalloh: I think that people do not know about this option and would really appreciate learning about it. It’s also important to remember that, in most cases, people are still going to get a better deal with insurance by paying, say, a $5 or $10 drug copay. …Learn More