March 18, 2021
Retirees Who Tested Well Added More Debt
A new study finds that debt burdens have grown for older workers and retirees in recent decades. But this isn’t the first research to reach that conclusion.
What is new is whose debt burden is increasing the most: the people who score higher on simple memory and math tests.
Across the three age groups the researchers examined – 56-61, 62-67, and 68-73 – the high scorers on the cognitive tests were more likely to have debts exceeding half of their assets in 2014 than the high scorers who were the same ages back in 1998.
They also added disproportionately more mortgage debt than people with lower cognition during the study’s time frame, a period when house prices were rising.
The upshot of this study is that people who have retained more of their memory and facility with numbers are “more financially fragile” than the high scorers were in the past, the University of Southern California researchers said.
The findings run counter to a common belief that financial companies in recent years have had more success selling their increasingly complex products to unwitting borrowers – a belief perhaps fostered by the subprime mortgages targeted to risky borrowers in the mid-2000s that triggered the global financial collapse.
The share of the older people in the study who were carrying debt increased between 1998 and 2014 regardless of their cognitive ability. The biggest jump occurred after 62 – a popular retirement age pegged to Social Security eligibility.
The heart of the analysis, however, is exploring the connection between cognitive ability and financial vulnerability. The researchers found the opposite of what one might expect: debt problems have loomed larger over time for those with higher scores on survey questions testing word recall and cognitive ability using simple subtraction and backward-counting exercises. …
December 3, 2020
Woman with Dementia Gets Lots of Support
In the 3 1/2 years since Brenda Lugar was diagnosed with dementia due to Lewy body disease, she has found great comfort in the people who want to make her life a little easier.
This support takes many forms. At church on Sunday mornings, Shirley always reminds Lugar of her name. When Lugar is writing an email, she knows it’s okay to text her friend, Michele, or her sister-in-law, Janet, for help finding the right word. Lugar’s husband of 43 years, Robert Lugar, recently bought her a special board for Christmas so she has a place to work on her jigsaw puzzles – and he insisted she open it early and start enjoying it now.
“Just that little thing – it meant a lot,” she said in a recent interview.
It’s common for people who are grappling with the painful reality of a dementia diagnosis to deny their condition or hide it from others. But not Brenda. Asking for the support she needs – and getting it – is “soul cleansing,” she said.
Lugar, who is 62, didn’t arrive at this place immediately. When a neurologist at Duke University Medical Center diagnosed her, her initial reaction was denial. “I said, ‘Oh you can cure me.’ He said, ‘I can’t cure you but I can slow it,’ ” she said. “When he said that, I knew that wasn’t good. I kind of shut down.”
Lewy body disease is a condition in which abnormal protein deposits in the brain can cause dementia. For Lugar, disclosing her disease gives her an odd sense of relief – it’s an explanation to others for her memory loss, her intermittent hallucinations about animals, and her uneven performance at work. “I had to tell people, because I wasn’t the same person,” she said.
She even shared her condition with a store clerk to explain her fumbling with the credit card reader. “If I tell them [and] if they have any decency in them, they’ll treat me better,” she said.
Barbara Matchar, director of the Duke Dementia Family Support Program, which Lugar participates in, said that people like Lugar “who are open about their diagnosis often feel relieved.”
Lugar was diagnosed in 2017 after she noticed frightening things happening to her at work. …Learn More
November 10, 2020
Does Retiring Cause Memory Loss?
After four or five decades of work, retirement is liberating! It’s gonna be great! Right?
Well, not necessarily. It depends on how you retire.
In this video, Ross Andel, director of the School of Aging Studies at the University of South Florida, warns that a risk to retiring is that it can “speed up the aging of our brain. It could make us slower and more forgetful.”
His research demonstrates how work and retirement influence brain functioning. He tested the memories of people in their early 60s living in Canberra, Australia. Every four years, they were asked to remember as many random and unrelated words in a list as they could.
Naturally, they couldn’t remember as many words at 74 as at 62. “This is quite normal,” he said.
More interesting was what Andel found when he separated the test results for the retirees from the results for the older individuals who were still working. The decline in memory was almost exclusively among the retirees.
“Something seems to happen around the time of retirement to make people more forgetful,” he said.
Andel isn’t recommending that you work until you drop. He does provide a roadmap for limiting memory loss so you can enjoy retirement.
To find out what he has in mind, you’ll have to watch the video. …Learn More
November 5, 2020
Changing Social Security: Who’s Affected
Due to the strength and agility required for physical labor, half of blue-collar workers sign up for Social Security as soon as they’re eligible – at age 62.
But a large majority of white-collar workers wait so they can lock in a larger monthly check for retirement.
In a new study, Lindsay Jacobs at the University of Wisconsin found that blue- and white-collar workers would also respond very differently to potential increases in the program’s two benchmark ages: the earliest eligibility age and the full retirement age.
Raising the earliest eligibility age to 64 would not change retirees’ lifetime benefits. But a two-year hike in the full retirement age would amount to a significant benefit cut – and with the depletion of Social Security’s trust fund projected for 2035, some version of this change might one day be considered.
The first change – raising Social Security’s earliest claiming age – would require a much bigger adjustment by blue-collar workers. Jacobs predicted that this group would respond by working an extra year, on average, compared with a few more months for white-collar workers.
Requiring workers to wait longer for their benefits does have a financial advantage: a larger Social Security check every month. The problem for some blue-collar workers is that they couldn’t make it to 64. One result, then, is that increasing the early retirement age would push up applications to Social Security’s disability program, according to the study funded by the Retirement and Disability Research Consortium.
Jacobs gauged the impact of raising the early retirement age based on how quickly workers’ declining health would affect their ability to work as they age. To understand how they would react to raising the full retirement age, she examined how workers’ decisions about retiring, saving, and signing up for Social Security would change under various policies. She classified the workers as blue- or white-collar using data that describes job tasks to show that the physical demands at work influence these decisions.
The second possible change would increase the full retirement age by two years, which amounts to an across-the-board cut in benefits regardless of when workers claim them. In response, white-collar workers, who are already more inclined to hold out until the full retirement age, would be more likely to work even longer to reach the new, higher benchmark age.
But blue-collar workers would bear the brunt of the benefit cuts, because their physically demanding jobs would often prevent them from working longer to offset the cuts. …
November 3, 2020
Men’s Health and Disability Applications
It’s often true that men in their 50s who’ve done physically demanding jobs for decades develop debilitating conditions. But they’re not old enough to retire and collect Social Security.
Particularly during economic downturns, many of these workers have turned to a fallback option: federal disability benefits.
While economic conditions and policy changes are primarily responsible for the year-to-year changes in applications for disability, there is growing evidence of worsening health and functioning among men in their 50s and 60s. A new study has found that these trends have also increased the number of older workers who may qualify for disability benefits.
The researchers first confirmed past studies showing that this population’s health has gotten worse since the 1990s. More of them are suffering from various debilitating conditions, including asthma, hypertension, diabetes, and cancer.
The older workers also increasingly reported having trouble carrying out some basic activities required to do their jobs, such as reaching overhead, kneeling, and standing for two hours. Evidence of the older workers’ deteriorating condition over time was confirmed in separate analyses of two different surveys: the Health and Retirement Study and the National Health Interview Survey.
The heart of the study was to measure the potential impact of declining health and work capacity on the Social Security disability program.
The analysis finds that the deterioration in men’s health is likely to have increased the share of these men who could qualify for disability benefits by more than 15 percent between the mid-1990s and mid-2010s. The rise in potential demand for benefits was unrelated to the aging of the baby boom population, which the researchers accounted for.
Economic downturns like the Great Recession increase disability applications and awards. But those increases are usually temporary. …Learn More
October 22, 2020
Cognitive Decline Meets COVID-19 Scams
The federal government warns that older Americans are being targeted by a battery of financial scams, including telemarketers offering to do contact tracing – for a fee – or to reserve a slot for a future vaccine. Others are soliciting donations to charities purportedly helping people in need during the economic slowdown.
COVID-19 makes this a perilous time for people struggling with cognitive decline.
Few can escape a deterioration in their cognitive capacity as they age. It’s just a matter of degree and speed. But the faster it happens, the more damage it can do, the FINRA Investor Education Foundation concluded in a new study.
The study was based on surveys of more than 1,000 older residents in Chicago retirement communities and subsidized housing – average age, 80. The same people were periodically asked questions with varying degrees of difficulty about their general financial knowledge and investments and were asked to compare and calculate percentages.
The older people who either initially had less understanding of financial concepts or experienced a faster decline in their knowledge made poorer financial decisions in exercises that simulated real-world decisions.
This included a vulnerability to scams, which was assessed by asking the older people to agree or disagree with statements like this: “If a telemarketer calls me, I usually listen to what they have to say.” (Not recommended.) And this: “If something sounds too good to be true, it usually is” (Count on it.)
To prevent scams, older people – and their caregivers – need to anticipate the financial damage that cognitive decline can cause. …Learn More
July 2, 2020
Recession Destabilizes Boomers’ Finances
The COVID-19 recession has changed everything.
This extreme disruption in our lives is always top of mind, which was reflected in our most widely read articles so far this year, based on the blog’s traffic.
Baby boomers, their retirement plans having been deeply affected by the Great Recession, are once again reassessing their finances. One popular article explained that the boomers who were in their early to late 50s during the previous recession lost about 3 percent of their total wealth at the time. This put their retirement planning at a distinct disadvantage compared with earlier generations in their 50s, whose wealth, rather than shrinking, grew 3 percent to 8 percent. The current recession is the second major setback in just over a decade.
Prior to the pandemic, readers liked articles about making careful retirement plans. Post-pandemic, the most popular article was about laid-off boomers desperate for income who may have to start their Social Security prematurely. The retirement benefits can be claimed as early as age 62, but doing so locks in the smallest possible monthly Social Security check – for life.
Even before Millennials were hit by the recession, they were already farther behind older generational groups when they were the same age. One article explained that the typical Millennial had just $12,000 in wealth. They are “the only generation to have fallen further behind” during the pre-pandemic recovery, the Federal Reserve said.
Here are a dozen of this blog’s most popular articles for the first half of 2020. They are grouped into three topics: COVID-19 and Your Finances, Retirement Planning, and Retirement Uncertainties.
COVID-19 and Your Finances:
Social Security Tapped More in Downturn
Lost Wealth Today vs the Great Recession
Originally posted at https://squaredawayblog.bc.edu/tag/aging/