Thursday, June 15, 2017
When thinking about Social Security for retirement purposes, we know that recipients can be confused about when to draw benefits. But it may also be unclear what type of benefits are available for certain beneficiaries. So Kiplinger's Social Security quiz is a quick and easy way to test your Social Security knowledge. The 10 multiple choice questions covers topics such as early retirement, spousal benefits, the effect of divorce, dependent benefits, the trust fund and the future of Social Security. Check it out!
Tuesday, June 6, 2017
Our exclusive Retirement Savings Calculator will help you estimate the future value of your retirement savings and determine how much more you need to save each month to reach your retirement goal. Actual results will depend on how much you contribute to your retirement accounts, the rate-of-return on your investments, and how long you live. (The calculator does not take taxes on your retirement income into account so your actual spendable income will be less.)
Try it out. It really is quick and easy. It would be a great tool to use with our students to get them thinking about financial security and the importance of planning for retirement.!
Thursday, May 18, 2017
Social Security is a popular social insurance program administered by the Social Security Administration. It provides critical resources and economic security to many workers who are retired or have a disability, as well as to their survivors and dependents. This webinar is designed for legal services and other advocates who are just getting started in the field and others who want to learn more about the essentials of the program. This Legal Basics: Social Security webinar will cover the basics of the Social Security program and the rules surrounding it, including general information on how the program works and who is eligible to claim benefits (including spouses and children). We will also discuss other basic information such as timing considerations when applying for benefits, how benefits are calculated, and suggestions on where to find further information.
To register for this free webinar, click here.
Friday, May 12, 2017
On May 10, 2017, my research colleagues Gavin Davidson (Queens University Belfast) and Subhajit Basu (University of Leeds) participated in a policy briefing at Stormont, the Northern Ireland Assembly in Belfast. They appeared in support of recommendations by the Commissioner of Older People (COPNI) Eddie Lynch on a major plan for modernization of social care programs for vulnerable adults (of any age).
Professors Davidson and Basu focused on three key recommendations:
- Northern Ireland should have a single legislative framework for adult social care with accompanying guidance for implementation. This could either be new or consolidated legislation, based on human rights principles, bringing existing social care law together into one coherent framework.
- All older people in Northern Ireland, once they reach the age of 75 years, should be offered a Support Visit by an appropriately trained professional. This will be based on principles of choice and self-determination and is aimed at helping older people to be aware of the support and preventative services that are available to them.
- Increasing demands for health and social care reinforce the importance of considering how these services should be funded. All future funding arrangements must be equitable and not discriminate against any group who may have higher levels of need.
The audience, which included researchers, social service program administrators and elected officials (not only from Northern Ireland, but elsewhere, including the Isle of Man), reportedly responded strongly to the recommendations, especially to the concept of specially-trained "support visitors," offered to persons age 75 or older. The intent is to provide individuals with planning support and, where needed, medical assessment. Guidance and information is often needed for pre-crisis planning, thus moving in the direction of prevention of crises and reduction of need for last-minute response. The support visitor concept has been used successfully in Denmark and other locations in Europe. The next step for Northern Ireland would likely be a pilot or test project.
As a co-author of the research reports that led to the COPNI recommendations, working with Professors Gavin Davidson and Subhajit Basu as part of a team headed by Dr. Joe Duffy of Queens University Belfast, I found it an interesting coincidence that at almost the same time as the Northern Ireland government session, I was addressing similar interests in "preventative" planning while speaking on elder abuse in a "Day on the Hill" program at the Capitol in Pennsylvania, hosted by the Alzheimer's Association. It is clear that on both sides of the Atlantic, we are interested in cost-effective, proactive measures to help people stay in their homes safely.
Wednesday, May 10, 2017
Writing for the Institute for Family Studies, George Washington Law Professor Naomi Cahn and University of Minnesota Law Professor June Carbone dig into the black and white of statistics on "gray" divorce, with interesting observations. For example:
First, some good news for everyone: the divorce rate is still not all that high for those over the age of 50. Yes, it has doubled over the past 30 years: in 1990, five out of every 1,000 married people divorced, and in 2010, it was 10 out of every 1,000 married people. And yes, the rate has risen much more dramatically for gray Americans than for those under 50; in fact, there was a decline in the rate for those between the ages of 25-39. But the divorce rate for those over 50 is still half the rate for those under 50.
Divorce for older individuals often does have significant impacts for individuals in retirement, as they point out:
These statistics don’t mean that gray divorce isn’t a problem. Those who divorce at older ages, like those who divorce at younger ages, tend to have less wealth than those who remain married, with the gray divorced having only one-fifth of the assets of gray married couples. Compared to married couples, gray divorced women have relatively low Social Security benefits and relatively high poverty rates. While gray married, remarried, and cohabiting couples have poverty rates of four percent or less, 11 percent of men who divorced after the age of 50 were in poverty, and 27 percent of the women were in poverty.
For more, read "Who is at Risk for a Gray Divorce? It Depends."
Sunday, April 23, 2017
Justice in Aging has released a new fact sheet, New Guidance from SSA on Spousal & Survivors Benefits for Married LGBT Individuals. "On March 1, 2017, the Social Security Administration (SSA) announced it would reopen any decision to deny spousal or survivors benefits to a same-sex spouse based on a discriminatory marriage ban, which resulted in a loss of benefits to the individual who filed the claim." The fact sheet notes an SSA ruling and POMS. "This policy change applies to applications for spousal or survivors benefits that SSA denied prior to the Windsor and Obergefell decisions because it did not recognize their marriages. Even those who began receiving SSA benefits following the Supreme Court decisions may be due retroactive benefits for the period between when they first applied (and were denied) and when SSA finally recognized their marriage." The fact sheet also explains who is not affected as well as who might be. The fact sheet concludes explaining that SSA is in the process of reaching out to 800 beneficiaries whose benefits were denied to tell them their applications are being reopened.
Click here to read the full fact sheet.
Wednesday, March 8, 2017
The teachers' pension fund in Puerto Rico is the latest example of an under-funded government-operated retirement plan. A unique complication of the Puerto Rico teachers' plan is the decision to opt out of Social Security as a separate form of retirement income. In a recent New York Times article, the reporter makes the the analogy to a Ponzi scheme:
Puerto Rico, where the money to pay teachers’ pensions is expected to run out next year, has become a particularly extreme example of a problem facing states including Illinois, New Jersey and Pennsylvania: As teachers’ pension costs keep rising, young teachers are being squeezed — sometimes hard. One study found that more than three-fourths of all American teachers hired at age 25 will end up paying more into pension plans than they ever get back.
“I think they’re really being taken advantage of,” said Richard W. Johnson of the Urban Institute, a co-author of the research. “What’s so tragic about this is, often the new hires aren’t aware that they’re getting such a bad deal.”
The problem is magnified by the fact that the Puerto Rico teachers union — like many teachers and police unions around the country — opted out of Social Security long ago, hoping it could save both workers and the government money by not paying Social Security taxes.
That decision was predicated on the assurance that the workers’ pensions would be well managed and adequately funded. But in Puerto Rico, as in some other places, that has not been true for decades.
For more, read In Puerto Rico, Teachers' Pension Fund Works Like a Ponzi Scheme.
Monday, February 27, 2017
The Washington Post ran a recent story about saving for retirement. Two-thirds of Americans aren’t using this easy way to save for retirement stress the importance of workers taking advantage of various workplace retirement accounts yet many fail to do so.
Fewer than one-third of Americans are saving money in their 401(k)s and other workplace retirement accounts, according to an analysis of tax records by Census Bureau researchers.
Although nearly 80 percent of Americans work for an employer that offers retirement programs — whether a 401(k), 403(b) or something else — only 32 percent of workers sign up for such accounts, according to a working draft of the study by Michael Gideon and Joshua Mitchell. The researchers studied W-2 tax forms from 2012 from 155 million American workers for their findings, which help shed light on just how ill-prepared many Americans are for the future.
The article discusses the importance of saving for retirement for the various age groups and notes that it's unlikely that those close to retirement have a realistic idea of what it costs to live during retirement.
Older workers ... are increasingly experiencing sticker shock when they realize just how much money they’ll need for retirement, said Manisha Thakor, a financial adviser in Portland, Ore. The most conservative calculations estimate Americans will need to have about eight to 10 times their annual salary saved for retirement, she said.
“By the time people see how much they need, it seems so horrific and out of bounds that they just freeze and do nothing,” she said, adding that she counsels clients to save at least 20 percent of their income toward retirement and other expenses. “They just throw their hands up and say, ‘What’s the point of even trying at this point? I’m so far off.’ ”
At the same time, people are living longer, which means they’ll have to save up that much more to help support themselves in their post-work years. She added, “Layered on top of both generations is the specter of student loan debt, which has now eclipsed credit card debt.”
The student debt referenced in the article is that taken on for their kids or grandkids.
What is the way to get more workers to take advantage of the offered workplace retirement plans? One idea in the article is automatic enrollment. Even though that may be successful, don't forget, "[i]n recent weeks ... Congress has moved to repeal Obama administration measures that allow states to automatically enroll workers ii retirement programs."
Monday, February 20, 2017
George Washington Law Professor Naomi Cahn recommended an interesting new article from the Elder Law Journal, "The Precarious Status of Domestic Partnerships for the Elderly in a Post-Obergefell World."
Authors Heidi Brady, who is clerking for the Fifth Circuit Court of Appeals, and Professor Robin Fretwell Wilson from the University of Illinois College of Law, team to analyze key ways in which elderly couples in domestic partnerships may be treated differently, and sometimes more adversely, than same sex couples who are married. From the abstract:
Three states face a particularly thorny question post-Obergefell [v. Hodges, the Supreme Court's 2015 decision recognizing rights to marry]: what should be done with domestic partnerships made available to elderly same-sex and straight couples at a time when same-sex couples could not marry. This article examines why California, New Jersey, and Washington opened domestic partnerships to elderly couples. . . . This Article drills down on three specific obligations and benefits tied to marriage -- receipt of alimony, Social Security spousal benefits, and duties to support a partner who needs long-term care under the Medicaid program -- and shows that entering a domestic partnership rather than marrying does not benefit all elderly couples; rather, the value of avoiding marriage varies by wealth and benefit.
Thank you, Naomi, for this recommendation.
February 20, 2017 in Estates and Trusts, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Medicaid, Social Security, State Cases, State Statutes/Regulations | Permalink | Comments (0)
Sunday, January 22, 2017
University of Illinois Law Professor Richard Kaplan responded to my post last week, that questioned the appropriate age to compel IRA distributions, by providing a more in-depth look at the topic, via his own article, Reforming Taxation of Retirement Income.
His recommendations include simplifying how Social Security retirement benefits are taxed, bifurcating defined contribution plan withdrawals into capital gains and ordinary income components, repealing certain exceptions to the early distribution penalty, reducing the delayed distribution penalty and adjusting the age at which it is triggered, and changing the residential gain exclusion to avoid unanticipated problems with reverse mortgages.
The 2012 Virginia Tax Review article demonstrates that increased life expectancy supports an increase to age 74 (from 71.5) as the trigger for mandatory distributions.
Thanks, Dick! As always, you have important analysis to share.
Friday, January 20, 2017
Under long-standing IRS rules, IRAs and similar retirement accounts created with tax deferred income are generally subject to "required minimum distributions" when the account holder reaches age 70 and a half. As the IRS.gov website reminds us:
- You can withdraw more than the minimum required amount.
- Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
As the Wall Street Journal recently reported, as baby boomers are now reaching that magic age of 70 1/2+, there will be huge mandatory transfers of savings, creating taxable income, even if they don't actually need the retirement funds yet.
Boomers hold roughly $10 trillion in tax-deferred savings accounts, according to an estimate by Edward Shane, a managing director at Bank of New York Mellon Corp. Over the next two decades, the number of people age 70 or older is expected to nearly double to 60 million—roughly the population of Italy.
The account holders may not actually "need" the money in their early 70s, an age now often seen as "young" for retirement, and they may still be in high tax brackets, thus cancelling the original reasons for the savings and deferral. The rules were made when average lifespans were shorter.
On average, men and women who turned 65 in 2015 can expect to live a further 19 and 21.5 years respectively, according to the U.S. Social Security Administration’s most recent life-expectancy estimates; those post-65 expectancies are up from 15.4 and 19 years for those who turned 65 in 1985.
....[D]istributions are expected to grow exponentially over the next two decades because of a 1986 change to federal law designed to prevent the loss of tax revenue. Congress said savers who turn 70½ have to start taking withdrawals from tax-deferred savings plans or face a penalty. Specifically, retirees who turn 70½ have until April of the following calendar year to pull roughly 3.65% from their IRA and 401(k) funds, subject to slight differences in the way the funds are treated by the Internal Revenue Service. Then they must withdraw an increasing portion of their assets every year based on IRS formulas. The rules don’t apply to defined-benefit pensions, where retirees get automatic distributions.
There is a 50% penalty for failure to make required minimum withdrawals. And not all retirees are aware of the consequences of failing to make with withdrawals, especially when accounts were created originally by a spouse who is no longer alive or is unable to manage the account personally. From the Wall Street Journal article:
Bronwyn Shone, a financial adviser in Pleasanton, Calif., said many of her clients aren’t aware of their legal obligation to take distributions. “I think some people thought they could let the money grow tax-deferred forever,” she said.
Certainly the federal government wants -- and an argument can certainly be made that it "needs" -- more tax revenues, but if the goal of the permitted deferral is to encourage saving for the the "real" needs of retirement, which can include disability, health care, long-term care, and other "late in aging" needs, is it still realistic to set the mandatory threshold for withdrawals at age 70.5? For example, Donald Trump is just today commencing his "new job" at age 70 and a half, and yet he could be subject to the RMDs for any IRAs. Maybe this is a financial issue that might interest the new Trump Administration?
For more, read Pulling Retirement Cash, but Not by Choice, by WSJ reporters V. Monga and S. Krouse (paywall protected article from 1/16/17).
Tuesday, January 17, 2017
With the new Presidential administration ahead, many of us are asking what government policies or programs will be "re-imagined." With changes on the horizon, an especially interesting perspective on long-term care is offered by UCLA Law Professor Allison Hoffman with her recent article, "Reimagining the Risk of Long-Term Care," published in the Yale Journal of Health Policy, Law & Ethics. From the abstract:
While attempting to mitigate care-recipient risk, in fact, the law has steadily expanded next-friend risk, by reinforcing a structure of long-term care that relies heavily on informal caregiving. Millions of informal caregivers face financial and nonmonetary harms that deeply threaten their own long-term security. These harms are disproportionately experienced by people who are already vulnerable--women, minorities, and the poor. Scholars and policymakers have catalogued and critiqued these costs but treat them as an unfortunate byproduct of an inevitable system of informal care.
This Article argues that if we, instead, understand becoming responsible for the care of another as a social risk--just as we see the chance that a person will need long-term care as a risk--it could fundamentally shift the way we approach long-term care policy.
As one informal caregiver and scholar described: “I feel abandoned by a health care system that commits resources and rewards to rescuing the injured and the ill but then consigns such patients and their families to the black hole of chronic ‘custodial’ care.” What next friends do for others is herculean, both in terms of the time spent and the ways that they offer assistance.
January 17, 2017 in Current Affairs, Dementia/Alzheimer’s, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Medicaid, Social Security, State Statutes/Regulations, Statistics | Permalink | Comments (0)
Monday, January 9, 2017
Social Security's blog, Social Security Matters, posted the full retirement age info for 2017. 2017 Brings New Changes to Full Retirement Age explains that for those between 1955-1956, full retirement age is 66 and 2 months. The post also explains what the increase in full retirement age means to benefits: "[a]s the full retirement age continues to increase, there are greater reductions in benefits if you claim them before you reach full retirement age. For example, if you apply for benefits in 2017 at age 62, your monthly benefit amount will be reduced nearly 26 percent." The blog also offers tips to those who are contemplating retirement along with helpful links.
Wednesday, December 28, 2016
Imagine a person who has at last retired, is drawing Social Security and still has outstanding student loans. Farfetched? Not at all. And, in fact, the GAO issued a report noting how Social Security checks are being reduced to repay these student loans. The Wall Street Journal explains about the report in the article, Social Security Checks Are Being Reduced for Unpaid Student Debt:
The report highlights the sharp growth in baby boomers entering retirement with student debt, most of it borrowed years ago to cover their own educations but some used to pay for their children’s schooling. Overall, about seven million Americans age 50 and older owed about $205 billion in federal student debt last year. About 1 in 3 were in default, raising the likelihood that garnishments will increase as more boomers retire.
Student loan debt isn't dischargeable in bankruptcy, but the effect of the government's actions is to leave some Social Security recipients below the poverty level. "[C]onsumer advocates and some congressional Democrats say the government’s tactics have become too aggressive, targeting many borrowers who are destitute and have no hope of repaying. Most Social Security recipients rely on their checks as their primary source of income, other research shows."
The GAO report, Social Security Offsets: Improvements to Program Design Could Better Assist Older Student Loan Borrowers with Obtaining Permitted Relief offers the following findings
Older borrowers (age 50 and older) who default on federal student loans and must repay that debt with a portion of their Social Security benefits often have held their loans for decades and had about 15 percent of their benefit payment withheld. This withholding is called an offset. GAO’s analysis of characteristics of student loan debt using data from the Departments of Education (Education), Treasury, and the Social Security Administration (SSA) from fiscal years 2001-2015 showed that for older borrowers subject to offset for the first time, about 43 percent had held their student loans for 20 years or more. In addition, three-quarters of these older borrowers had taken loans only for their own education, and most owed less than $10,000 at the time of their initial offset. Older borrowers had a typical monthly offset that was slightly more than $140, and almost half of them were subject to the maximum possible reduction, equivalent to 15 percent of their Social Security benefit. In fiscal year 2015, more than half of the almost 114,000 older borrowers who had such offsets were receiving Social Security disability benefits rather than Social Security retirement income.
In fiscal year 2015, Education collected about $4.5 billion on defaulted student loan debt, of which about $171 million—less than 10 percent—was collected through Social Security offsets. More than one-third of older borrowers remained in default 5 years after becoming subject to offset, and some saw their loan balances increase over time despite offsets. However, nearly one-third of older borrowers were able to pay off their loans or cancel their debt by obtaining relief through a process known as a total and permanent disability (TPD) discharge, which is available to borrowers with a disability that is not expected to improve.
GAO identified a number of effects on older borrowers resulting from the design of the offset program and associated options for relief from offset. First, older borrowers subject to offsets increasingly receive benefits below the federal poverty guideline. Specifically, many older borrowers subject to offset have their Social Security benefits reduced below the federal poverty guideline because the threshold to protect benefits—implemented by regulation in 1998—is not adjusted for costs of living (see figure below). In addition, borrowers who have a total and permanent disability may be eligible for a TPD discharge, but they must comply with annual documentation requirements that are not clearly and prominently stated. If annual documentation to verify income is not submitted, a loan initially approved for a TPD discharge can be reinstated and offsets resume.
Tuesday, December 20, 2016
Social Security has released a video series for Rep Payees that is an interdisciplinary training "to educate individuals and organizations about the roles and responsibilities of serving as a representative payee, elder abuse and financial exploitation, effective ways to monitor and safely conduct business with the banking community, and ways to recognize the changes in decisional capacity among vulnerable adults and seniors." There are 5 videos (1 of which is a short introduction) with the 4 training videos running in length from 15-35 minutes, depending on the topic. The topics include technical training as a rep payee, recognizing financial exploitation and vulnerable adult abuse, strategies for dealing with the financial community and changes in a beneficiary's decisional capacity. A transcript is available in addition to the video.
Sunday, November 13, 2016
As I've spent several recent weeks of my sabbatical in Arizona to be closer to my 90+ year old parents, I watched the run up to the election from this Southwestern vantage point, instead of my usual Pennsylvania location. Not only was I surprised by the result of the Pennsylvania vote, it was a surprise to see Arizona voters -- usually a Republican stronghold with a strong "senior" vote-- struggle with the election choices available to them.
On November 8, Arizona rejected legalization of recreational marijuana (predictable) and approved a significant increase of minimum wage (a closer call, as the business community in Arizona largely opposed that increase). Further, Trump had angered some by throwing shade on 80-year-old Senator John McCain's "hero" reputation. In contrast, Trump's seeming alliance with controversial Sheriff Joe Arpaio, despite the later's pending criminal contempt prosecution, gave other Arizonans pause. Ultimately, 84-year-old Arpaio was voted "out" in Arizona (but, it remains to be seen whether he will be "out" of government at the federal level too). In other words, Arizonans were not voting in support of a "pure" Republican platform.
My mom, a Democrat but a somewhat reluctant Hillary supporter, was glued to CNN for much of the summer and fall, and she accurately predicted the Trump victory despite the pollsters' and commentators' refusal to acknowledge the frustrations driving the Trump tidal. She insisted on voting on election day, rather than taking advantage of Arizona's early vote options.
We know little about how Donald Trump will prioritize and govern once he takes the reins of his very first elected position. That uncertainty makes many nervous even as it makes others hopeful.
What will a Trump Administration mean for aging Americans? Some topics to consider:
- Public Retirement Benefits: Candidate Trump -- rarely one to get into the details of policy issues -- seemed o make a distinction between age-based benefits, including Social Security retirement and Medicare health insurance coverage, and disability-based benefits. Congress may seize on the latter. Trump argued "more jobs, less waste" was a cure for the solvency questions. On the one hand, he says he would support privatizing "some portion" of Social Security savings or investments to allow individuals to self-invest, while on the other hand rejecting "government" in the role of the retirement"investor." He seems willing to consider means testing for payment of retirement benefits. Here's a link to several utterances of Donald Trump on the topic of Social Security.
- Health Care for Seniors: Unlike ObamaCare in general, it will probably be harder for Donald Trump and Congress to displace the fundamentals of Medicare for seniors. But real cost questions attend health care for seniors. At what point will Trump be hit with the reality that all of his campaign plans about immigration, walls, foreign trade and infrastructure pale in comparison to the true challenges facing an aging American on health care?
- Medicaid for Long-Term Care: Candidate Trump has probably not focused on Medicaid as a source of long-term care financing. With Republicans controlling the House and Senate, however, will the old "anti-Medicaid planning" forces feel newly energized?
- Consumer Protections for Older Americans: Candidate Trump will feel the pressure from Republican-controlled Congress to roll back administrative safeguards implemented by President Obama during the last two years. Perhaps here is where seniors may feel the quickest impact from the change in power, including potential rollbacks on consumer protection measures that attempted to bar pre-dispute binding arbitration "agreements" for nursing home residents, implemented fiduciary duty standards for investment advisors, and imposed closer scrutiny on consumer credit companies. Indeed, the most direct threat of the Trump Administration, combined with the Republican Congress, is likely to be to "Elizabeth Warren's Consumer Financial Protection Bureau."
How this all plays out will be "interesting," won't it? The points above are about today's generation of seniors. Perhaps the most important Trump impact will be for "future" seniors, especially if Trump's predicted roll back on environmental protections and his advisors' seeming rejection of climate science hold sway.
Wednesday, November 9, 2016
The Wall Street Journal ran an article last month about a study that focused on people's decision-making regarding whether to retire. Before Retiring, Take This Simple Test reports on study by "Philipp Schreiber and Martin Weber at the University of Mannheim in Germany, [where] a simple two-question quiz [was developed] that can help predict whether you’ll regret the timing of your own retirement." Two questions-that's pretty easy, right. Here we go, it won't take you long to answer them:
Question 1: You just learned that you are due a tax refund. If you’d like, you can get the $1,000 refund right away. Alternatively, you can get a $1,100 refund in 10 months. Which do you prefer?
Question 2: You just learned that you are due a tax refund. If you’d like, you can get a $1,000 refund in 18 months. Alternatively, you can get a $1,100 refund in 28 months? Which do you prefer?
How did you answer them? According to the article, "[t]he point of the exercise is to measure the consistency of a person’s time preferences. Someone with consistent time preferences should answer both questions the same way—choosing the early option both times, or the delayed option both times. Such consistency is a requirement for making financial plans that you stick with." There are folks who don't answer consistently, and that's a red flag, the article explains. Those folks "exhibit a tendency known as present bias, or hyperbolic discounting. They strongly prefer rewards that arrive right away." As for timing of retirement, the article notes that study shows that those who provided inconsistent answers ultimately regret the timing (too early) of their retirement.
The article suggests some positive applications of the study results. For those of us who participate in savings via payroll deductions, such programs could be improved "if they were personalized according to the results of the two-question quiz. Consider a person who exhibits a strong bias for receiving rewards in the present. Given the likelihood that she’ll be tempted by an early retirement, she might want to be defaulted to a higher savings rate during her working years. This will help her avoid future regret over the timing of her retirement decision, since she will have sufficient savings." The article goes further, suggesting changes to enrollment in Social Security to minimize buyer's remorse for early retirement (evidently a lot of folks start drawing Social Security at age 62, which we all know results in a permanent reduction in benefits).
The study referenced in the WSJ article is reported in The Influence of Time Preferences on Retirement Timing. The abstract explains
This study analyzes the empirical relation between the decision when to retire and individuals time preferences. Theoretical models predict that hyperbolic discounting leads to dynamic inconsistent retirement timing. Conducting an online survey with more than 3,000 participants, we confirm this prediction. The analysis shows, that time inconsistent participants decrease their planned retirement age with increasing age. The temptation of early retirement seems to become stronger the closer retirement comes. We show that the negative effect of age is between 1.5 and 3 times stronger for participants who can be classified as hyperbolic discounters. In addition, we find that time inconsistent participants actually retire earlier. On average, the most time inconsistent participants retire about 2.2 years earlier. The time inconsistent behavior has severe consequences: Time inconsistent participants are ex post more likely to regret their retirement timing decision. Also, the unplanned early retirement leads to a constant decrease of retirement benefits of about 13%.
The full paper can be downloaded from the SSRN link here.
Sunday, November 6, 2016
Our local newspaper, the Tampa Bay Times, recently ran a story about elders who work at low-paying jobs. Although they may wish to retire, they find themselves unable to afford retirement. For some low-income workers, retirement is only a dream explains that for low-wage workers can't afford to retire. "Studies have found that about one-third of low-wage workers ... say they'll never be able to afford retirement. The problem is particularly acute among minority women... mA 2016 study by the Associated Press-NORC Center for Public Affairs Research found that a quarter of workers 50 or older say they won't retire. Among low-wage workers, earning less than $50,000 a year, it was 33 percent."
Consider the following statistics:
A 2016 report by the nonpartisan research nonprofit National Institute on Retirement Security shows that many black, Hispanic and Asian women have to work past retirement age to be able to afford basic expenses. Women were 80 percent more likely than men to be impoverished.
The research showed that for men ages 70 to 74, about 19 percent of their income comes from wages. For women, it's about 15 percent.
Some low-wage workers will be able to collect Social Security, which will be of some help, but as the story notes, some without legal status won't be able to draw Social Security. One of the individuals featured in the story is 70 years old and works 6 days a week as the caregiver a 100 year-old person.
So what happens if the low-wage worker falls ill and is unable to continue to work? Might family step in to help? Are there options?
Monday, October 31, 2016
SSA announced recently that there would be a COLA for 2017, but it is a teensy COLA, actually, a .03% increase. Big gap between Social Security cost-of-living adjustment and retiree inflation offers a critical look at the 2017 COLA compared to inflation and how the government calculates the COLA using the consumer price index. An article in USA Today about the 2017 COLA noted that this COLA won't allow beneficiaries to get ahead, even slightly. Instead, they will likely lose ground, because of the Medicare Part B premium costs
The nation’s 65 million Social Security beneficiaries will receive a paltry 0.3% cost-of-living adjustment to their monthly checks in 2017, the government announced Tuesday. In dollars and cents, it means the average retired beneficiary’s check will rise about $5 to $1,360 per month in 2017.
The even more bitter pill: Many current Medicare beneficiaries won’t be able to spend any of that extra money. Instead, they’ll likely have to send their COLA straight back to Uncle Sam to cover higher Medicare Part B premiums.
Almost a third of Medicare's 56 million beneficiaries could see their premiums jump 22% next year, according to the Medicare Trustees Report, putting the cost at an estimated $149 per month. Those unlucky 30% of beneficiaries include people enrolling in Part B for the first time in 2017, people who are on Medicare but who aren't currently taking Social Security benefits and current enrollees who pay an income-related higher premium.
Friday, October 21, 2016
LeadingAge, the trade association that represents nonprofit providers of senior services, begins its annual meeting at the end of October. This year's theme is "Be the Difference," a call for changing the conversation about aging. I won't be able to attend this year and I'm sorry that is true, as I am always impressed with the line-up of topics and the window the conference provides for academics into industry perspectives on common concerns. For example, this year's line up of workshops and topics includes:
- General sessions featuring Pulitzer Prize winning journalist Charles Duhigg on the "The Science of Productivity," 2013 MacArthur Fellow and psychologist Angela Duckworth on the the importance of grit and perservance for successful leadership, and famed neurosurgeon and speaker Sanjay Gupta on "Medicine and the Media."
- Hundreds of sessions, organized by "interest groups":
October 21, 2016 in Advance Directives/End-of-Life, Consumer Information, Current Affairs, Dementia/Alzheimer’s, Discrimination, Elder Abuse/Guardianship/Conservatorship, Ethical Issues, Federal Statutes/Regulations, Health Care/Long Term Care, Housing, International, Legal Practice/Practice Management, Medicaid, Medicare, Programs/CLEs, Property Management, Retirement, Science, Social Security, State Cases, State Statutes/Regulations, Veterans | Permalink | Comments (2)