January 15, 2019

Savings Tips Help Millennials Get Serious

This is young adults’ financial dilemma in a nutshell: you’re well aware you should be saving money, but you admit you’d rather spend it on the fun stuff.

Yes, paying the rent or student loans every month takes discipline. But it isn’t enough. Even more discipline must be summoned to save money, whether in an emergency fund or a retirement plan at work.

Tia Chambers, a financial coach in Indianapolis and certified financial education instructor (CFEI), has put some thought into how Millennials can overcome their high psychological hurdles to saving.

The 32-year-old lays out six doable steps on her website, Financially Fit & Fab, which she recently elaborated on during an interview.

Get in the right mindset. “It is the hardest part,” she said. “When I speak with clients, money is always personal, and it’s also emotional.” The best way to clear the emotional hurdles is to keep a specific, important goal in mind that continually motivates you, for example buying a house. Or create a detailed savings challenge, such as vowing to save $1 the first week, $2 the second week, $3 the third week, etc. This adds up to $1,378 at the end of the year, she said.

Cut expenses. Some cuts are no-brainers. Scrap cable for Hulu and Netflix subscriptions. Drop that gym membership you never use. The biggest challenge for young adults is saying no to friends who want to go out for dinner or drinks. Chambers suggests enlisting your friends to help – after all, they’re probably spending too much too. She and her friends have agreed to go out one weekend and save money the next weekend by hanging out at someone’s apartment. Another idea is happy hour once a week instead of twice. …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

January 3, 2019

Here’s What Our Readers Liked in 2018

We’re kicking off 2019 with our periodic review of the most-read articles over the past year, based on the blog traffic tracked by Google Analytics.

Judging by the comments readers leave at the end of the blog posts, baby boomers are really diving into the nitty-gritty of preparing themselves mentally and financially for retirement. Financial advisers also frequently comment on Squared Away, and we hope some of our web traffic is because they’re sharing our blog with their clients.

Last year, Squared Away received recognition from other media. The Wall Street Journal recommended us to its readers for the blog’s “wonderful mix of topics.” The Los Angeles Times picked up our article, “Why Retirement Inequality is Rising.” MarketWatch published our posts about how pharmacists can help seniors reduce their prescription drug prices and about a Social Security reform to reduce elderly poverty.

The most popular blogs in 2018 fall into five categories:

The Big Picture

How Social Security Gets Fixed Matters

Future ‘Retirees’ Plan to Work

Just Half of Americans Enjoy Bull Market

Personality Influences Path to Retirement

How and When to Retire

Know About the 401(k) Surprise

How Retirees Can Negotiate Drug Prices

Work vs Save Options Quantified

What’s a Geriatric Care Manager Anyway?

Geriatric Help Eases Family Discord

Retirement Pitfalls

Retirees Get a 401(k) Withdrawal Headache

Social Security Mistakes Can Be Costly …Learn More

December 20, 2018

Merry Christmas and Happy New Year!

Be safe during the holidays, whether you’re traveling across town or across the country to enjoy your family and friends.

We’re taking a break too at the Center for Retirement Research. This blog will return on Thursday Jan. 3 with a roundup of our readers’ favorite articles in 2018. …Learn More

December 18, 2018

Holidays with Dementia in the Family

When my grandmother was spirited away by dementia and no longer recognized me, I stopped visiting her in the nursing home.

I didn’t understand this at the time but now think that I just wanted to remember her baking lemon cream pies or waving at me as she rode around on her lawnmower cropping the lot next to her Indiana farmhouse.

I wish I could get another chance and do things better this time. Regret is hard to live with.

Psychologist Ann Kaiser Stearns views the holidays as a precious time of year to make elderly family members feel they are loved and included in the festivities.

“People respond for as long as they live to smiles, to touch, to music, to kindness, to sitting in the sun, to pumpkin pies,” Stearns, a professor of behavioral science, said in an interview.

“We just need to remember that all of that nourishes an elderly person to whatever degree they have impairments,” said Stearns, who also wrote “Redefining Age: A Caregiver’s Guide to Living Your Best Life.”

Stearns encourages people to make an extra effort to connect with a loved one over the holidays and provides some tips:

Be patient. Take the extra time to sit down with your parent, aunt, or uncle and talk to them. Encourage them to reminisce. “Don’t do something if you don’t have the time,” Stearns said.

Be present. If grandma doesn’t remember you or something that happened in the past, do not argue with her or ask, “Why don’t you remember?!” She advised that it’s better to say, “Remember grandma, it’s your granddaughter from Baltimore.” When an elderly person repeats or forgets, connect with them where they are now, even if it means going through the same conversation again.

Stir sweet memories. Stearns said that her friend’s father, a former minister, has Alzheimer’s but the friend brings him to church anyway. When Stearns’ parents were old, they used to sit happily watching the squirrels in their yard while her father smoked cigars. It’s important to repeat rituals that are uplifting and have always brought meaning to their lives. …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
5 percent.

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

December 4, 2018

Home Equity Offers Big Boost to Retirees

Retirees’ primary sources of income are the usual suspects: Social Security and employer retirement plans. They rarely use a third option: the equity locked up in their homes.

The Urban Institute recently quantified how much this untapped equity could be worth to seniors in the United States and 10 European countries if it were converted to income – and the amounts are significant.

The typical retired U.S. household has the potential to increase its retirement income by 35 percent, researchers Stipica Mudrazija and Barbara Butrica estimate. In Europe, using home equity would add anywhere from 19 percent in Sweden to 100 percent in Spain.
…Learn More