June 19, 2012
Is 62 Dead (as a Retirement Age)?
Life expectancy rises. Wages stagnate. Retirement accounts shrink. Guaranteed monthly pensions are an endangered species.
The average U.S. age for men retiring from work has gradually increased to 64. Yet age 62 continues to be held out as the popular standard, perhaps because that’s Americans’ marker for Social Security eligibility.
Is retirement at age 62 destined be a casualty of dovetailing medical, financial, economic and even political trends? Many baby boomers are already postponing retirement into their mid- or even late 60s. One study found that claiming Social Security at 62 is becoming less popular, a trend that is expected to continue despite the hardships of the Great Recession.
“I don’t think it’s dead, but its health has eroded,” Chuck Miller, a Chicago communications consultant who specializes in retirement, said about age-62 retirement in this country.
Wisconsin’s failed recall election for Governor Scott Walker suggested growing U.S. voters’ disdain for generous pensions and early retirement ages, even as Europeans protest government proposals to raise public employees’ retirement ages. Rhode Island has already raised its employee retirement age to 67, from 62 previously. And voters in San Jose just approved measures to scale back public worker pensions that included an increase in the retirement age.
Squared Away readers, where do you stand? Have you or will you retire at age 62? Tell us about your situation or your theories!Learn More
June 14, 2012
Progress Stalls for Young Adults
The promise of America is progress, but that progress stalled for the youngest generation: U.S. workers under age 45 earned dramatically less than workers who were that same age a decade ago, the Federal Reserve Board’s latest survey shows.
For Americans 35 through 44, the median household income – the income that falls in the middle of all earners – was $53,900 in 2010. That’s 14 percent less income than in 2001 when households in the 35-44 age bracket were earning $63,000, according to the Fed’s Survey of Consumer Finances released Monday. For young adults in the under-35 age bracket, median income fell to $35,100 in 2010, from $40,900 for that group in 2001.
The median income also declined, by nearly 9 percent, for Americans in their peak earning years, 45 through 54, to $61,000 in 2010 from $66,800 in 2001. [Incomes for all years are in current dollars.]
The sharp decline in real incomes, especially for young adults, occurred in a decade bracketed by the high-tech bubble of early 2000 and the jobless recovery of 2010 from the financial crisis. Without further analysis, it’s difficult to pinpoint precise explanations for the patterns. But the reasons vary depending on the age bracket being analyzed.
For the youngest workers, incomes may be lower if many are extending their college educations – high school and college graduates face the lowest level of employment ever recorded.
May 29, 2012
Boomers May Stop Work Because They Can
Baby boomers who’ve left the labor force in their pre-retirement years are in better financial shape than they once were.
The wealth of non-working Americans between ages 55 and 61 increased from $83,000 in 1992 to $98,000 in 2008, according to new research from the Urban Institute in Washington. (Comparisons are in constant dollars.)
Potential explanations for this trend range from greater U.S. inequality that launched more boomers into the top wealth tier to a rise in the numbers of married men who don’t work – but have wives who do.
Barbara Butrica, a senior research associate at the Urban Institute, said her study did not look into the “why” for the emerging group of voluntary non-workers who are approaching traditional retirement ages, married and single men in particular. One possibility, she said, is that “they are leaving the labor force because they can afford to.” …Learn More
May 24, 2012
Wanna Live Forever, Huh?
Mark Wexler (right), director of the documentary “How to Live Forever,” with fitness celebrity Jack Lalanne.
Immortality hasn’t been this hot since Ponce de Leon searched for the fountain of youth in 16th Century Florida.
The evidence: Captain Jack Sparrow (a.k.a. Johnny Depp) searched high and low for it in “Pirates of the Caribbean” Part IV last summer. Meanwhile, U.S. beaches were littered with the polka dot cover of “Super Sweet Sad Love Story” about a dystopian Manhattan, where longevity had to be earned. Mark Wexler’s documentary, “How to Live Forever,” was a bizarre-funny send up of baby boomers’ search for their fountains of youth. And time – not money – was the currency in the Justin Timberlake vehicle, “In Time.” Another Twilight vampire movie on the way…
This spring, Jane Fonda is promoting her new book, “Prime Time,” about what she calls the “third act” of life as more Americans are increasingly healthy into their 70s, 80s, even 90s. Not to put a damper on things, but can we afford our third act if we’re not Jane Fonda?
Noting the 30-year increase in U.S. longevity over the 20th century, she said it is ushering in a lifestyle “revolution.” But an index produced by the Center for Retirement Research, which funds this blog, indicates that we won’t have enough income to afford it. This regularly updated retirement index shows that nearly half of U.S. households with boomers in their early 50s are “at risk” of not having enough money for retirement.
Are you ready for your glorious third act? Or will it be more like the explorer’s quest? Pure myth.
May 22, 2012
New Financial Tools Backed by Research
The Center for Retirement Research at Boston College has created a prototype personal finance website with tools and information on topics ranging from how to reduce spending or refinance a mortgage to the best way to draw down savings during retirement.
The website offers a comprehensive set of tools backed by impartial academic research – not sales pitches. Individuals can use each calculator, “Learn More” lesson, or “How To” guide individually or as the building blocks for an overall financial plan, which they can construct in a step-by-step process that begins on the homepage.
The website, also called Squared Away, was created by the Financial Security Project (FSP), a financial education initiative of the Center. It was funded (also like this blog) by the Social Security Administration.
The Center plans to distribute the site through various organizations, such as credit counselors, financial planners, employers, credit unions, and non-profits involved in helping low-income people build up their savings.
The website is still in the “beta” phase and will be improved over the coming months. We invite readers to try out the tools and comment on them by clicking “Learn More” below. All comments – good and bad – are welcome.Learn More
May 15, 2012
Financial Perils of the Single Woman
Being a single woman is serious stuff – financially that is.
One website recently published a humorous list of the advantages of being a single woman today. “You don’t have to be worried about not getting a special gift from Him on your special day because there is no Him.” Or: “There is no argument about where or when to go on vacation.” Toilet seats were also mentioned.
This may not amuse 30-something women with serious concerns about whether they’ll marry and have children. But face it: single women of all ages have more difficult money issues than their married friends. When two incomes are coming into the household, a couple shares the rent or mortgage. Fixed expenses can add up over a single woman’s life or during long bouts after, say, divorce.
“Single women are far more at risk,” said Wendy Weiss, a former financial adviser who writes a blog on her website, Hot Flash Financial. “If we make 77 cents on every dollar [men earn], men have 23 percent more discretionary income, and that’s usually the amount we advisers recommend you put away,” she said. Women also live longer and need more money to get through retirement, she said.
Prior to retirement, the rule of thumb is that single people need well more than half, possibly as much as 70 percent, of a childless couple’s combined income to afford the same lifestyle. It is higher for the poor (whose fixed expenses consume more of their total income) and for single mothers (for obvious reasons). …Learn More
May 3, 2012
Read That Social Security Statement!
This week, the federal government put every worker’s Social Security statement online. But while most people look at their statements, research shows that more than one in three misses this major point: the longer one waits to file, the larger the monthly retirement check will be.
We’re talking big numbers: someone eligible to receive $1,000 a month at the popular retirement age of 62 can get $1,333 by waiting until 66 and $1,760 by waiting until 70. Of course, one’s health, financial resources, and life events may make filing later difficult or impossible. But getting the information is critical to making a smart decision, which plays a major role in one’s financial well-being in retirement.
The Social Security Administration (SSA) put the statements online after creating a minor news flap last year when it stopped sending them via snail mail to workers. In February, SSA resumed the mailings to Americans age 60 and older. (Full disclosure: SSA funds this blog through the Center for Retirement Research at Boston College.)
Back to the point: The statements are now easily available on ssa.gov to individuals willing to provide some personal data – the site verifies the personal data they enter online against information held by the credit scoring company, Experian.
Here are a few other things about Social Security that might surprise you. According to various research papers that seek to understand how Americans view their benefits: …Learn More