ideas & tips – Save Learning https://save-learning.com Learn To Save Money Anytime Thu, 08 May 2025 08:22:08 +0000 en-US hourly 1 https://save-learning.com/wp-content/uploads/2023/05/logosave-120x120.png ideas & tips – Save Learning https://save-learning.com 32 32 E-Commerce Mastery: Tiny Tips That Make A Ton Of Cash https://save-learning.com/e-commerce-mastery-tiny-tricks-that-make-a-ton-of-money/ Tue, 06 May 2025 13:29:27 +0000 https://save-learning.com/e-commerce-mastery-tiny-tricks-that-make-a-ton-of-money/ If you need success in e-commerce, it isn’t all the time about spending extra on advertisements and reinventing sure merchandise. Whereas these could be extraordinarily useful, all of it tends to come back right down to the smaller and simply ignored strikes. We reside in a world the place everyone is chasing vital hacks that they’ll deal with in a short time. Most winners on this world are those that implement smaller modifications that stack as much as one thing nice.
There are lots of tips you possibly can implement in the present day with out hiring an costly marketing consultant or rebuilding the shop solely. From small psychological cues to underutilized options, sure techniques can fully shift how individuals work together with you. These aren’t simply luxuries – they’re money-saving suggestions that can even drive conversions and construct belief. E-commerce giants use these sorts of strategies subtly, so why shouldn’t you? On this submit, we are going to undergo just a few tips with a purpose to convey long-term outcomes and enhance your backside line. Let’s start:
Enter Belief Badges In The Most Necessary Locations
It’s good to let individuals know concerning the belief badges accessible, however you shouldn’t scatter them round in random locations. Enter them immediately subsequent to the likes of costs and fee choices. A small shift like this may improve credibility at a time when patrons might hesitate. Most customers make impulsive choices rapidly, so a well-positioned belief sign will preserve the automobile from being deserted. Passive browsers will flip into lively patrons and also you gained’t want to vary a single phrase of the copy.
Psychological Pricing Cues
Psychological pricing works for everybody. Dropping a worth from, say, $20.00 to $19.95 convinces people who they’re paying lots much less. You too can use visible anchors resembling Most Well-liked tags with a purpose to affect choices sooner than sure different lists. Even the smallest psychological nudges value nothing to implement however create a severe sense of urgency inside any purchaser.

Auto-Fill Checkout Fields
You need to use geolocation instruments to pre-fill necessary fields resembling nation, forex, and completely different transport choices. The consumer must put in much less effort and they’ll make fewer errors. Native fee strategies can be surfaced, and you’ll provide affirmation that the client is finishing the fee from a safe account. You’ll construct belief immediately and create a clean expertise. With clever checkouts, you’ll expertise fewer drop-offs and extra profitable transactions.
Exit-Intent Affords With out Annoying Clients
With a well mannered exit-intent pop-up that triggers solely as soon as, you possibly can provide sure reductions or free transport in trade for an e mail. An possibility like this needs to be clear and non-invasive. It might appear to be a small factor, however one tiny script can win again hundreds of potential misplaced income. An added bonus can be that you might construct your record and improve the percentages of long-term buyer relationships. You will need to get this type of transfer proper, after all, as a result of it’s very simple to frustrate a buyer after they want to full a quite simple transaction.
 

]]> Use the Funded Standing Metric and a “Surplus Bucket” to Enhance Spending in Retirement https://save-learning.com/use-the-funded-status-metric-and-a-surplus-bucket-to-increase-spending-in-retirement/ Sat, 26 Apr 2025 22:25:55 +0000 https://save-learning.com/use-the-funded-status-metric-and-a-surplus-bucket-to-increase-spending-in-retirement/ Most of us are comparatively conservative in terms of figuring out
how a lot we are able to afford to spend in retirement. All issues being equal,
we’d quite die with an excessive amount of cash than too little. Apparently,
nonetheless, some researchers are anxious that we might not be spending
wherever close to sufficient and should purchase life annuities to rectify that
scenario. Of their latest article, researchers Drs. David Blanchett and Michael Finke attain a number of conclusions, together with:“People are inclined to view cash held in financial savings accounts otherwise than wealth held within the type of revenue.”“Retirees
spend a a lot greater proportion of their annuitized revenue and spend
about half the quantity that they might safely spend from non-annuitized
wealth.”“Our outcomes present proof that retirees bracket
wealth held in investments otherwise than wealth held as revenue and
consequently spend lower than could be optimum in a life-cycle mannequin.”“Retirees
who’re behaviorally proof against spending down financial savings could higher
obtain their life-style objectives by rising the share of wealth
allotted to annuitized revenue”, and“Much less educated and
risk-averse retirees could also be significantly liable to underspending [since?]
out of concern of depleting wealth.”On account of their
analysis, they argue for implementation of insurance policies that incentivize (or
default to) the annuitization of retirement wealth.We’re stable
followers of utilizing lifetime revenue (Social Safety, pensions and life
annuities) to fund important bills in retirement, and we encourage
customers of the Actuarial Strategy to fund the current worth of their
important bills with the current worth of their non-risky belongings in a
“Flooring Portfolio” bucket. We aren’t huge followers, nonetheless, of utilizing these
non-risky belongings to fund the current worth of anticipated discretionary
bills, because the anticipated return on such non-risky belongings is mostly
decrease than the anticipated return on dangerous belongings. Subsequently, regardless that
we’re not monetary advisors, now we have no drawback encouraging retirees
to aggressively fund their anticipated discretionary bills with dangerous
asset investments of their “Upside Portfolio” bucket.Our place
on utilizing dangerous belongings to fund discretionary bills seems to be at
odds with the suggestions of Drs. Blanchett and Finke. Not a
drawback. Whereas now we have nice respect for these gents, this isn’t
the primary time that we must comply with disagree with them.The
goal of this put up is to supply help to readers who aren’t
essentially desirous about shopping for extra life annuities than they should
cowl their important bills, however wish to maximize their
spending to the extent potential with out leaving an unintended massive
property after they go (assuming their demise doesn’t happen sooner than
anticipated). We may also embody an instance.Utilizing Funded Standing and a Surplus Bucket to Enhance Spending Throughout RetirementThis
is what we propose to extend spending in retirement: In case your
beginning-of-year Funded Standing exceeds 150% (or 140% if you’re extra
aggressive), you possibly can switch out of your Upside Portfolio Bucket to a
“Surplus Bucket” an quantity equal to the quantity that would scale back your
beginning-of-year Funded Standing to 150%. The Surplus Bucket could be a
low-interest fee account that might be readily accessed (like a
checking account), and wouldn’t be thought of a part of the family’s
belongings as soon as transferred (for Funded Standing calculation functions). The
goal of the Surplus Bucket could be to carry funds designed to be
spent over a comparatively quick interval, together with probably taxes on the
quantity transferred from the Upside Portfolio Bucket. This Surplus Bucket
switch calculation is straightforward to do (iteratively) within the Actuarial
Monetary Planner by merely getting into an quantity in one of many
non-recurring expense rows, 0 for the interval of delay 1 for the fee
interval and noting the affect on the calculated Funded Standing. By
transferring quantities from the Upside Portfolio bucket to the Surplus
Bucket, the family would acknowledge that these funds are “surplus”
funds that needs to be spent over some cheap time frame so as
to maximise spending and keep away from leaving an unintended massive bequest.ExampleSteve
and Edie retired on January 1, 1995. They had been each age 65. Steve’s
Social Safety profit was $12,000 each year and Edie’s was $6,000
(one-half of Steve’s). Steve outlined profit pension was $15,000 per
annum payable for his life. Additionally they had belongings of $300,000 invested
100% in equities. Steve and Edie estimated their annual recurring
important bills (together with taxes) to be $25,000 each year and their
annual recuring discretionary bills to be $10,000 each year. They
deliberate to spend $10,000 each year on holidays till they each reached
age 80 (thought of to be 100% discretionary).To calculate Steve
and Edie’s January 1, 1995 Funded Standing, their Social Safety advantages
had been assumed to extend every year with inflation. Steve’s pension was a
fastened greenback quantity payable for his life. Their bills had been additionally
assumed to extend with inflation every year. They assumed that the
fairness of their fully-paid house would cowl their long-term care wants
if mandatory.Based mostly on a 6% non-risky funding return
assumption, an 8% dangerous funding return assumption 3% inflation and
the present AFP lifetime planning interval default assumptions, they
calculated their January 1, 1995 Funded Standing utilizing the Actuarial
Monetary Planner to be 110.40%. Projection assumptions:
We projected Steve and Edie’s Funded Standing calculations every year from
January 1, 1995 to January 1, 2025 utilizing the next projection
assumptions: The family Social Safety advantages and bills had been
elevated every year by the precise Social Safety COLA improve for the
12 months. Their fairness investments had been assumed to earn the precise return
for the S&P 500 for every year. They had been assumed to reside every year
and spend precisely the quantities inputted at first of the 12 months for
their bills. Every time their starting of 12 months Funded Standing exceeded
150%, they had been assumed to switch funds to their Surplus Bucket to
roughly carry their Funded Standing all the way down to round 150%. In 2002,
the assumed non-risky funding return valuation assumption was lowered
from 6% to five%. In 2008, the assumed non-risky funding return
assumption/inflation assumption was lowered from 5%/3% to 4%/2.5%, and
in 2023, it was elevated to five%/3%.Projection Outcomes:
As of January 1, 2025 when each Steve and Edie had been 95 years outdated,
Steve’s Social Safety profit was $25,303, Edie’s was $12,652 and
Steve’s pension was nonetheless $15,000. Their annual recurring important
bills had been $52,711 and their annual discretionary bills had been
$21,080. They not budgeted for trip bills (as initially
deliberate). Their January 1, 2025 belongings had been $475,491 and over time,
they’d transferred over $1,000,000 to their Surplus
Bucket to spend as they desired. They transferred cash to their Surplus
Bucket in all however 8 years of their retirement (the primary 4 years when
their Funded Standing was lower than 150%, 2003, 2004, 2009 and 2010 when
their Funded Standing dipped under 150%. As of the start of 2025, they
transferred $90,000 to their Surplus Bucket and their Funded Standing was
156.58%. They nonetheless had their house fairness and any unspent Surplus
Bucket belongings to make use of to fund any long-term care and funeral expense
wants. The most important drop of their Funded Standing (which treats any
transfers to the Surplus Bucket as spending) was years 2000 to 2003 when
it decreased by a complete of 26%. So, if their Funded Standing was 150% as
of January 1, 2000 (which it wasn’t as a result of they transferred lower than
the complete quantity they might for 2002), it will have dropped to about
111% as of January 1, 2003. Subsequently, at no time throughout the projection
interval had been Steve and Edie required to lower their budgeted
discretionary spending, and if they’d been required to take action, they
in all probability might have merely dipped into their Surplus Bucket on the time,
assuming they hadn’t spent all of it (which could have been robust for
them to do). From about 2008 on, the current worth of Steve and
Edie’s non-risky belongings ceased to cowl the current worth of their
important bills (due to Steve’s fastened greenback quantity life
annuity). They may have bought further annuity quantities to cowl
the distinction, however once more, their probably unspent Surplus Bucket would
have greater than lined the comparatively small rising shortfall.If
they spent many of the cash of their Surplus Bucket on gadgets that had been
significant to them, Steve and Edie had been profitable in managing their
spending and retirement experiences and for essentially the most half, prevented
leaving an unintended massive legacy.SummaryWe
don’t have any cause to query Drs. Blanchett and Finke’s analysis
concluding that much less educated and risk-averse retirees could also be
significantly liable to underspending out of concern of depleting wealth. It
is our hope, nonetheless, that through the use of a greater metric (Funded Standing) than
sometimes utilized by monetary advisors or different 4% Rule advocates, and
maybe utilizing the Surplus Bucket method, our extra educated
readers can overcome this concern and higher handle their spending to
obtain their objectives. Additional, the instance on this put up clearly reveals
that if future fairness returns duplicate returns over the previous 30 years
(which we’re advised we shouldn’t assume), the potential for better
returns and spending maximization is more likely to happen with a
significant slice of family retirement funds in equities quite
than a preponderance in annuities.

]]> I am Retiring (from full-time running a blog) https://save-learning.com/im-retiring-from-full-time-blogging/ Thu, 24 Apr 2025 10:24:23 +0000 https://save-learning.com/im-retiring-from-full-time-blogging/ On April 12, 2015, I wrote my first put up on this weblog.

A decade of writing. 
441 articles. 
1 Million Phrases.

Wow.
It’s been a heckuva experience. I’m in awe that over 16,000 of you subscribe to my weblog and browse what I write (a honest “Thank You!” to all of you).  It’s an honor, and I take it critically.  In that very first put up, I wrote the next:
“That is the story of my journey, instructed in The Current earlier than it turns into The Previous.”
I’ve at all times appreciated that sentence, and it’s turn into one among my objectives with this weblog.  To share my journey, as I’m dwelling it, with the hope that sharing my experiences will assist others obtain a fantastic retirement.
At this level in my journey, I really feel I’ve achieved that objective.  
As I search to repeatedly experiment with my retirement way of life, I problem myself to embrace the liberty these years provide. Typically it’s onerous, and in the present day is a type of days.  As that journey has developed, it’s reached the purpose the place it’s led to a significant determination for this weblog. 
That call?
I’m retiring from full-time running a blog.
However…I’m getting forward of myself.  To achieve perception into my determination and what it means for this weblog, learn on…
I am retiring from full-time running a blog. In the present day, the story behind my determination, and my plans for the long run… Share on X

I’ve recognized quite a lot of bloggers over the previous decade, most of whom have light away. That’s not a shock, on condition that 80% of blogs fail to outlive past 18 months.
One factor I’ve observed is how most bloggers appear to simply fade away.
They only…disappear.
At some point, you’re studying their stuff, and some months later, you notice you haven’t seen something from them shortly.  A yr later, they’re all however forgotten.
I’m taking a unique strategy.
As at all times, I’m being clear about this section of my journey, and I’d quite inform you what I’m pondering than have you ever marvel the place I’ve gone. That is my Current, earlier than it turns into my Previous.
After 10 years of diligent writing, it’s time to shift gears.  I nonetheless get pleasure from writing, however it’s changing into extra of an obligation than the true pleasure it’s been up to now.  With over 440 articles in my archives, it’s more durable to search out contemporary subjects to problem my thoughts.  I believe much less and fewer about potential subjects, a pointy distinction to the sooner years of writing when concepts have been continually flooding my thoughts.
It’s time to maneuver on.
I’ve at all times inspired you to do not forget that Retirement Is Like A Recreation of Poker, and challenged you to continually enhance the playing cards you’re holding.  If a card is getting stale, don’t hesitate to trade it for a brand new card from the deck. 
I’d be a hypocrite if I didn’t apply the identical recommendation. The running a blog card has gotten a bit stale, so I’m shuffling the deck and placing the cardboard down for some time.
I hope you’re doing the identical.
By no means cease experimenting.
By no means cease bettering your hand.

The Way forward for The Retirement Manifesto
The excellent news is, this weblog isn’t going wherever.  I’ve no intention of promoting it, and I plan on holding it on-line properly into the long run.  I’ll nonetheless write when the urge strikes.
The factor that can change is the frequency of my writing.  
In spite of everything, I’m retiring from full-time running a blog.  😉
I don’t know precisely what meaning but, however I’m going to discover it for some time to see the place it leads. I’ve been writing about retirement for a very long time, maybe I’ll use this platform to share ideas on different subjects sooner or later.  Most definitely, I’ll comply with the trail that Mr. Cash Mustache and JL Collins have taken, and write once I really feel I’ve one thing worthwhile to say.  They each solely write a number of occasions a yr, however I nonetheless learn each phrase.  I hope my readers will do the identical for me.
Keep tuned (and please don’t unsubscribe)…
I’m getting busier with different actions that I get pleasure from, and the running a blog card has turn into extra intrusive. I seldom discover time to sit down at my keyboard, and I’m nice with that.  I desire to be out…..

Climbing (I did a 13-miler final week!)…
Using my mountain bike within the woods. 
Swimming in a lake.
Taking part in in our backyard (that experiment succeeded, we’ve doubled the dimensions this yr) 
Hanging out at a campground.
Constructing a fence (we simply completed our a hundred and seventieth Freedom For Fido fence!). 
Exercising (you may comply with me on Strava).
Spending time with our daughter and granddaughter.

In the event you comply with my Instagram or Fb pages, you’ll see that I’m dwelling increasingly of my life exterior the partitions, and retiring from running a blog is per that development.

Why Now?
The tenth anniversary of my weblog looks as if time to announce my official retirement.
In my “actual” job, I retired on July fifth, the identical date (33 years later) that I used to be employed.
I wished to do the identical with my weblog, and had deliberate to publish this put up on April twelfth, 10 years from the date I wrote my first put up.  Life obtained in the way in which, and I missed the April twelfth goal by a number of weeks.
And that’s precisely the purpose.
Different issues in life have taken on the next precedence than my writing, and I’m embracing that.  Don’t fear, nothing is “improper,” and there’s no hidden agenda behind my determination.  It simply seems like the correct time to combine issues up a bit.  After 7 years of retirement, it’s now not a puzzle to me.  I’m content material with the place I’m in life, and discover fewer parts of retirement price serious about, price writing about.  The retirement transition is full, and taking a break from writing in regards to the matter aligns with that actuality.
I’ll nonetheless write once I really feel prefer it, however I received’t be publishing commonly.  I count on months could go by between articles, and I wouldn’t need to make that drastic a change with out letting you already know. 
As my life continues to evolve, the time could come once I desire to be again inside on the keyboard.  Or, it might not. 
Time will inform.
No matter what the long run holds, one factor I do know is that this:  The encouragement I’ve obtained from all of you over the previous 10 years is among the most rewarding issues I’ve skilled in my life.  Your engagement within the feedback, the emails, and the non-public visits means extra to me than you’ll ever know.  There may be nothing as satisfying as listening to from somebody who has determined to retire, and thanks me for serving to them navigate these fascinating waters known as retirement.
As my path leads in new instructions, a particular phrase of thanks to every of you.
I hope my phrases have inspired you to realize a fantastic retirement.  As I sign off to start my new retirement, I’ll depart you with one ultimate phrase to ponder: 
Freedom.
I’m embracing mine.
I encourage you to do the identical.
Till subsequent time…

]]> How Can Sensible Folks Argue for a Tax Minimize? – Heart for Retirement Analysis https://save-learning.com/how-can-smart-people-argue-for-a-tax-cut-center-for-retirement-research/ Wed, 16 Apr 2025 21:59:30 +0000 https://save-learning.com/how-can-smart-people-argue-for-a-tax-cut-center-for-retirement-research/ We have to get our fiscal home so as, not make issues worse.

On this new world, I’ve expanded my podcast listening to attempt to perceive the opposite crew.  Excessive on my listing is “All In” – initially a gaggle of 4 high-tech enterprise capital hosts, so clearly good guys and really wealthy.  Proper now, they’re three, as a result of considered one of their group, David Sacks, has develop into “White Home A.I. & Crypto Czar.”  Their angle appears to be that much less regulation and extra help for AI and different technological advances will result in a much bigger financial pie and extra stuff for the center class.  They don’t appear to be ideologues, and so they don’t prefer it when Trump does imply stuff. 

Apparently, this group has “found” that the U.S. faces a significant concern with regard to the federal funds and seems to help the efforts by Musk and his DOGE minions to chop spending to keep away from a meltdown.  What appears astonishing to me is that: 1) the fiscal state of affairs ought to come as “information” to this in any other case well-informed group; 2) the group doesn’t appear to grasp how the federal government spends its cash; and three) they by no means query the knowledge of a significant tax reduce that can enhance deficits and debt even additional.    

Our present fiscal state of affairs didn’t emerge in a single day.  We’ve got moved steadily from riches to rags since 2001, when the federal government ran a surplus and was scheduled to repay the nationwide debt by 2009.  The bi-partisan Committee for a Accountable Federal Price range has carried out an exquisite evaluation of the coverage adjustments which have contributed to the nation’s fiscal deterioration (see Determine 1).  And certainly, the deterioration has been a bipartisan effort of main tax cuts and spending will increase that has moved us from paying off the federal debt to having a deficit equal to about one hundred pc of GDP.  After all, debt turns into extra burdensome when rates of interest rise, however there’s actually no information right here.

By way of how the federal authorities spends its cash, personnel prices are a tiny, tiny fraction of the full.  Mainly, the federal authorities has been described as an insurance coverage firm with a standing military.  We spend our cash on retirement and well being advantages for the aged and people with disabilities (Social Safety and Medicare) and on applications to offer these in want with well being care (Medicaid) and revenue help (see Determine 2).  The 2 different main elements are protection spending and curiosity on the debt.  Personnel prices include about 4 % of whole outlays.  Randomly firing authorities staff is just not going to resolve something, and can solely trigger disruption in companies to the general public.

Lastly, how can anybody who pretends to be involved in regards to the nation’s fiscal state of affairs need to enact a significant tax reduce?  In response to the Congressional Price range Workplace (CBO), the federal government is at present slated to run a deficit equal to six.2 % of GDP in 2025.  With out corrective motion, deficits of roughly that dimension are projected all through CBO’s projection interval.  Because of these persistent deficits, debt swells.  Federal debt within the fingers of the general public rises from one hundred pc of GDP this 12 months to 118 of GDP in 2035, higher than at any level in our nation’s historical past (see Determine 3).  Importantly, these projections assume that a lot of the tax cuts within the Tax Cuts and Jobs Act of 2017 expire as deliberate on the finish of 2025.  If these tax cuts aren’t allowed to run out, the ratio of debt to GDP would enhance much more.  How can individuals who declare to fret in regards to the nation’s fiscal state of affairs argue for a significant tax reduce?

Briefly, I like listening to the opposite crew, however after they get in my lane they don’t make any sense in any respect.

]]> Will the Common Retirement Age Preserve Rising? – Middle for Retirement Analysis https://save-learning.com/will-the-average-retirement-age-keep-rising-center-for-retirement-research/ Tue, 15 Apr 2025 13:16:50 +0000 https://save-learning.com/will-the-average-retirement-age-keep-rising-center-for-retirement-research/ The transient’s key findings are:

After a century of decline, work exercise amongst older males stabilized within the Nineteen Eighties and commenced to rise within the early Nineteen Nineties.

This turnaround mirrored modifications in Social Safety, retirement plans, the character of labor, training ranges, and well being protection.

In response, the typical retirement age for males rose by about three years to 64.

Lately, it has remained comparatively steady because the modifications that drove the rise have performed themselves out.  

Thus, additional vital will increase within the common retirement age are unlikely.

Introduction

After almost a century of decline, work exercise amongst older males stabilized within the Nineteen Eighties and because the early Nineteen Nineties the typical retirement age has elevated by about three years.  The query is whether or not the elements that led to the rise over the past 30 years – modifications to Social Safety, retirement plans, the character of labor, instructional attainment, and so on. – will proceed to push out the retirement age or have they, for probably the most half, performed themselves out.  

This dialogue proceeds as follows.  The primary part places the final 30 years in context by exploring the explanations for the decline in labor power participation of males between 1880 and 1980.  The second part seems on the turnaround in labor power participation and the rise within the common retirement age that started within the early Nineteen Nineties.  The third part discusses the elements answerable for this turnaround, and the fourth part assesses the seemingly future affect of those elements.  The ultimate part concludes that the forces resulting in elevated participation of older employees might be exhausted, suggesting additional will increase within the common retirement age are comparatively unlikely.   

The Lengthy-term Decline in Employment Charges

Previous to the Eighties, males typically labored so long as they might, and on the finish of their lives, they’d solely about two years of ‘retirement,’ typically as a consequence of unwell well being.1  (Males are the main focus of this early dialogue, as a result of shifts within the work patterns of older ladies have extra to do with their altering roles over the twentieth century than with their retirement choices.)  Starting round 1880, the share of older males at work started to say no sharply (see Determine 1).

So, why did workforce participation begin to drop?  Consultants attribute this decline to an surprising and substantial stream of revenue that appeared within the type of old-age pensions for Civil Warfare veterans.  Veterans eligible for these pensions had considerably increased retirement charges than the inhabitants at massive.2

Apparently, because the veterans died off, work charges didn’t return to their earlier ranges.  One rationalization is the expansion of employees’ incomes, which allowed them to buy extra leisure on the finish of their lives.3  However employer attitudes have been additionally changing into necessary.  The U.S. workforce was quickly shifting from self-employment, most notably in agriculture, to workers of huge enterprises.  Employers more and more launched obligatory retirement ages for his or her workers.  And so they have been reluctant to rent older employees, particularly throughout the Nice Despair.4

The subsequent massive decline within the work charges of older males occurred after World Warfare II.  One apparent issue was the provision of Social Safety advantages, which started in 1940.  The postwar interval additionally noticed the growth of employer pensions, as union energy grew and companies more and more acknowledged pensions as an important element of their personnel techniques.  

The introduction of Medicare in 1965 and the sharp improve in Social Safety advantages in 1972 in all probability led to the ultimate leg of the decline in workforce exercise of older males.  And, as a result of advantages have been obtainable at age 62, Social Safety can also clarify a part of the decline in workforce exercise for males ages 55-64.  

The Turnaround

The downward trajectory stopped across the mid-Nineteen Eighties and, because the early Nineteen Nineties, the labor power participation of males each 55-64 and 65+ has regularly elevated.  This sample has led to a rise within the “common retirement age.”  The dialogue begins by persevering with with the give attention to males, after which turns to the extra sophisticated story for ladies.  

To place the magnitude of the turnaround in perspective, it’s helpful to have a look at labor power participation charges in three completely different years: 1964 – earlier than the “reversal;” 1994 – concerning the time the reversal started; and 2024 – the newest statement.  Essentially the most hanging change is that labor power participation in 2024 was increased at virtually any age than it was in 1994 (see Determine 2).  The connection between 2024 and 1964 can also be attention-grabbing.  At older ages, 2024 participation for males seems similar to that in 1964.  In distinction, participation between ages 50 and 65 is dramatically decrease in 2024 than in 1964.

These information on labor power participation can be utilized to assemble a measure of the typical retirement age, outlined because the age (in years and months) at which the labor power participation charge drops under 50 %.5  Based mostly on this definition, in 2024 the typical retirement age for males was 64.6, three years later than 1994 and virtually again to the Nineteen Sixties (see Determine 3).

Determine 3 additionally exhibits the typical retirement age for ladies.  Over the twentieth century every cohort of ladies had spent extra time within the labor power than the earlier cohort, growing the probability that they might be working at older ages.  Certainly, the participation charge information present work exercise amongst older ladies growing steadily from 1964 to 1994 to 2024 (see Determine 4).

The altering work lives of ladies make it tough to interpret tendencies of their common retirement age.  Determine 3 means that the retirement age for ladies rose dramatically from about 55 within the Nineteen Sixties to 62.6 in 2024.  In fact, the obvious low retirement ages within the early Nineteen Sixties merely replicate the truth that fewer ladies had spent a lot time within the labor power.  Lately, the typical retirement age for ladies seems to have stabilized.  The questions are, for each women and men, why did the rise within the common retirement age happen and the place can we go from right here?

Causes for the Turnaround

As famous, the downward trajectory stopped across the mid-Nineteen Eighties and, because the early Nineteen Nineties, the labor power participation of males each 55-64 and 65+ has regularly elevated.  Many elements assist clarify this turnaround.6   

Social Safety: Modifications to Social Safety made work extra engaging relative to retirement.  The liberalization, and for these on the Full Retirement Age (FRA) the elimination, of the earnings check eliminated what many seen as an obstacle to continued work.7  The rise within the FRA from 65 to 67 diminished advantages for these claiming early.  And, the improved delayed retirement credit score elevated incentives to maintain working between the FRA and age 70.8  One current estimate suggests these modifications have been answerable for about one-fifth of the rise in work for these ages 65-69.9  Clearly different elements additionally performed a job.

Pension sort: The shift from outlined profit to 401(ok) plans eradicated built-in incentives to retire.10  Furthermore, since 401(ok) contributors bear funding threat, they should work longer to build up a buffer in opposition to prematurely exhausting their sources.  Research present that employees lined by 401(ok) plans retire a yr or two in a while common than equally located employees lined by an outlined profit plan.11

Schooling: Schooling is a key determinant of employee productiveness.  Higher-educated employees have much less bodily demanding jobs, extra employment alternatives, are paid extra, and work longer.  Between 1985 and 2015, the share of older employees with faculty levels elevated sharply, and the tutorial hole between older and prime-age males largely disappeared.  The motion of huge numbers of males up the tutorial ladder helps clarify the rise in participation charges of older males.12

Improved well being and longevity: Common life expectancy for males at 65 has elevated about 3.2 years since 1990, and till 2010 the proof instructed that individuals have been more healthy as nicely.13  The correlation between well being and labor power exercise could be very robust, which means that the rise in disability-free life expectancy would have contributed to the elevated labor power exercise of older males.  

Decline of retiree medical health insurance: The speedy rise in healthcare prices has been accompanied by a major decline in employer provision of retiree medical health insurance.  This decline has dramatically modified the incentives dealing with older employees.  In the event that they stick with their employer, they proceed to obtain medical health insurance; in the event that they go away earlier than 65, once they qualify for Medicare, they’re compelled to buy insurance coverage on their very own.  Therefore, employees have a powerful incentive to remain working till they qualify for Medicare.14  

Much less bodily demanding jobs: The character of employment has additionally modified dramatically because the mid-Nineteen Eighties.  As manufacturing has declined, the service sector has exploded with knowledge-based alternatives.  Even inside manufacturing the character of jobs has modified, as companies have automated and outsourced manufacturing and employed extra managers, engineers, and technicians.  The brand new jobs put much less pressure on older our bodies.15 

Joint decision-making: The elevated share of married ladies working means the choice to retire entails each spouses.  Research recommend that husbands and wives wish to coordinate their retirement.16  Since wives on common are three years youthful than their husbands, in the event that they retire at age 62 (when first eligible to assert Social Safety), it might push husbands’ retirement age towards 65.17

Non-pecuniary elements: Older employees are typically among the many extra educated, the healthiest, and the wealthiest.18  Their wages are decrease than these earned by their youthful counterparts and decrease than their very own previous earnings.  This sample suggests that cash might not be the one motivator.

On account of these varied elements, the workforce exercise of males has elevated considerably since 1990.  The query is how this pattern interprets into modifications within the common retirement age. 

The place Do We Go from Right here?

The query is whether or not the early drivers of delayed retirement – modifications to Social Safety, the shift from outlined profit to 401(ok) plans, the rise in instructional attainment, enhancements in wholesome life expectancy, and the decline in retiree medical health insurance – will proceed to have a considerable affect resulting in will increase within the common retirement age going ahead.    

Social Safety.  All of the modifications within the Social Safety program are actually full.  No additional changes have been made to the earnings check.  The rise within the FRA from 65 to 67 was regularly phased in, starting with these born in 1938 and ending at 67 with these born in 1960.  These born in 1960 flip 65 this yr; thus, future cohorts will see no additional improve within the FRA.19  Lastly, the delayed retirement credit score – payable for individuals who declare advantages between the FRA and 70 – was additionally elevated regularly, from 3 % in 1983 to eight % in 2008.  Therefore, future cohorts will see no additional improve on this incentive.  In brief, current modifications to Social Safety shouldn’t have any impact on the typical retirement age going ahead.

Pension Kind.  The shift from outlined profit to 401(ok) plans is now full. Sure, some outlined profit plans live on within the public sector, however state and native employees account for less than about 10 % of the workforce and no main shift in pension sort is presently underway for this group.

Instructional Attainment.  A lot of the achieve within the labor power participation of older people has been attributed to their elevated instructional attainment.20  Certainly, for many of the twentieth century every technology of employees obtained extra training than the earlier one.  Because of this, the share of males ages 50-54 with a school diploma elevated sharply.  Nonetheless, within the mid-Nineteen Seventies the tempo of beneficial properties slowed, which meant that the share of males 50-54 with a school diploma stopped growing round 2000.  Since then the share with a school diploma has declined and rebounded, however stays roughly on the 2000 stage.  For girls, the advance in instructional attainment has continued – after a decade-long pause – however will seemingly stage off by 2030.21  The underside line is that instructional beneficial properties are unlikely to be a significant driver of longer work lives going ahead.

Improve in Wholesome Life Expectancy.  Till 2005, the pattern of rising disability-free life expectancy instructed elevated capability for work, however current research recommend this progress has stalled.22  Estimates of wholesome life expectancy at 50 – which mixes the incapacity charge with modifications in life expectancy – confirmed precise declines for lower-educated white employees and lower-educated Black males.  Therefore, substantial will increase within the capability to work longer is unlikely to maneuver the typical retirement age in coming a long time.  

Decline in Retiree Well being Insurance coverage.  As famous, the decline in employer-provided medical health insurance mixed with quickly rising healthcare prices has pushed employees to postpone retirement till they’re eligible for Medicare.  This shift away from providing retiree well being advantages is nearly full.  Lower than 20 % of huge companies – 200 or extra workers – provide retiree medical health insurance to present employees.  Smaller companies historically have hardly ever supplied this profit.23  Thus, altering employer-provided well being advantages will not present an growing incentive to work till 65. 

The underside line is that the elements contributing to the reversal within the labor power participation of older employees seem to have run their course.  Their affect will stay, so it’s unlikely the typical retirement age will decline.  Alternatively, they’ll present little impetus for will increase within the common retirement age.24    

Conclusion

After almost a century of decline, work exercise amongst older males stabilized within the Nineteen Eighties and commenced to extend within the Nineteen Nineties.  This turnaround mirrored modifications in Social Safety, retirement plans, and the character of labor, enhancements in instructional attainment, the necessity to look ahead to Medicare protection, and quite a lot of different elements.  In response, the typical retirement age elevated by about three years. 

You will need to put this three-year achieve in perspective.  The common retirement age remains to be decrease than it was when Medicare was enacted.  And the main drivers for the beneficial properties thus far seem to have performed themselves out, making vital future will increase within the common retirement age unlikely.  In brief, the beneficial properties thus far in working longer have been nice, however we in all probability have gone so far as we are able to go with out some new growth to alter folks’s incentives.   

References

Blau, David M. and Ryan M. Goodstein. 2010. “Can Social Safety Clarify Tendencies in Labor Pressure Participation of Older Males in the US?” Journal of Human Assets 45(2): 32-63.

Burtless, Gary. 2013. “The Affect of Inhabitants Getting old and Delayed Retirement on Workforce Productiveness.” Working Paper 2013-11. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Burtless, Gary and Joseph F. Quinn. 2002. “Is Working Longer the Reply for an Getting old Workforce?” Difficulty in Transient 11. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Coile, Courtney. 2025. “Altering Retirement Incentives and Retirement within the US.” In Social Safety Applications and Retirement across the World: The Results of Reforms on Retirement Habits, edited by Axel Borsch-Supan and Courtney Coile, 401-418. Chicago, IL: College of Chicago Press.

Coile, Courtney. 2021. “The Evolution of Retirement Incentives within the U.S.” In Social Safety Applications and Retirement across the World: Reforms and Retirement Incentives, edited by Axel Börsch-Supan and Courtney Coile, 435-459. Chicago, IL: College of Chicago Press. 

Coile, Courtney. 2015. “Financial Determinants of Staff’ Retirement Selections.” Journal of Financial Surveys 29(4): 830-853.

Cosic, Damir and C. Eugene Steuerle. 2021. “The Impact on Early Claiming Profit Discount on Retirement Charges.” Working Paper 2021-1. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Costa, Dora L. 1998. The Evolution of Retirement: An American Financial Historical past, 1880-1990. Chicago, IL: College of Chicago Press.

Engelhardt, Gary V. and Anil Kumar. 2007. “The Repeal of the Retirement Earnings Check and the Labor Provide of Older Males.” Working Paper 2007-1. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Friedberg, Leora. 2007. “The Latest Pattern In direction of Later Retirement.” Work Alternatives for Older People Sequence 9. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Friedberg, Leora and Anthony Webb. 2006. “Persistence in Labor Provide and the Response to the Social Safety Earnings Check.” Working Paper 2006-27. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Friedberg, Leora and Anthony Webb. 2005. “Retirement and the Evolution of Pension Construction.” Journal of Human Assets 40(2): 281-308.

Gustman, Alan L. and Thomas Steinmeier. 2009. “How Modifications in Social Safety Have an effect on Latest Retirement Tendencies.” Analysis on Getting old 31(2): 261-290.

Gustman, Alan and Thomas Steinmeier. 1994. “Employer-Supplied Well being Insurance coverage and Retirement Habits.” Industrial and Labor Relations Assessment 48(1): 124-140.

Johnson, Richard. 2004. “Tendencies in Job Calls for amongst Older Staff, 1992-2009.” Month-to-month Labor Assessment 127(7): 48-56.

Kaiser Household Basis. Employer Well being Advantages Survey, 2021. San Francisco, CA.

Karoly, L. A. and J. A. Rogowski. 1994. “The Impact of Entry to Postretirement Well being Insurance coverage on the Choice to Retire Early.” Industrial and Labor Relations Assessment 48(1): 103-123.

Kopczuk, Wojciech and Jae Tune. 2008. “Stylized Info and Incentive Results Associated to Claiming of Retirement Advantages Based mostly on Social Safety Administration Knowledge.” Working Paper WP-2008-200. Ann Arbor, MI: College of Michigan Retirement Analysis Middle.

Lahey, Karen E., Doseong Kim, and Melinda L. Newman. 2006. “Full Retirement? An Examination of Components That Affect the Choice to Return to Work.” Monetary Companies Assessment 15(1): 1-19.

Maestas, Nicole. 2005. “Again to Work: Expectations and Realizations of Work after Retirement.” Working Paper WR-196-1. Santa Monica, CA: RAND.

Margo, Robert A. 1993. “The Labor Pressure Participation of Older People in 1900: Additional Outcomes.” Explorations in Financial Historical past 30(3): 409-423.

Mastrobuoni, Giovanni. 2009. “Labor Provide Results of the Latest Social Safety Profit Cuts: Empirical Estimates Utilizing Cohort Discontinuities.” Journal of Public Economics 93(11): 1224-1233.

Michaud, Pierre-Carl, Arthur van Soest, and Luc Bissonnette. 2018. “Understanding Joint Retirement.” Working Paper 25030. Cambridge, MA: Nationwide Bureau of Financial Analysis.

Moen, Jon R. 1987. “Essays on the Labor Pressure and Labor Pressure Participation Charges: The US from 1860 by 1950.” Ph.D. Dissertation. Chicago, IL: College of Chicago.

Monk, Courtney and Alicia H. Munnell. 2009. “The Implications of Declining Retiree Well being Insurance coverage.” Working Paper 2009-15. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Munnell, Alicia H. 2022. “Find out how to Assume About Latest Tendencies within the Common Retirement Age.” Difficulty in Transient 22-11. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Munnell, Alicia H., Kevin E. Cahill, and Natalia Jivan. 2003. “How Has the Shift to 401(ok)s Affected the Retirement Age?” Difficulty in Transient 13. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Munnell, Alicia H. and Steven A. Sass. 2008. Working Longer: The Answer to the Retirement Earnings Problem. Washington, DC: Brookings Establishment Press.

Quinby, Laura D. and Gal Wettstein. 2021. “Are Older Staff Able to Working Longer?” Working Paper 2021-8. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Ruggles, Steven, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. 2010. Built-in Public Use Microdata Sequence: Model 5.0 [Machine-readable database]. Minneapolis, MN: College of Minnesota.

Rust, John and Christopher Phelan. 1997. “How Social Safety and Medicare Have an effect on Retirement Habits in a World of Incomplete Markets.” Econometrica 65(4): 781-831.

Rutledge, Matthew S., Christopher M. Gillis, and Anthony Webb. 2015. “Will the Common Retirement Age Proceed to Improve?” Working Paper 2015-16. Chestnut Hill, MA: Middle for Retirement Analysis at Boston School.

Sass, Steven A. 1997. The Promise of Non-public Pensions: The First Hundred Years. Cambridge, MA: Harvard College Press.

Schirle, Tammy. 2007. “Why Have the Labour Pressure Participation Charges of Older Males Elevated because the Mid-Nineteen Nineties?” Working Paper. Waterloo, ON: Wilfrid Laurier College, Division of Economics.

Tune, Jae and Joyce Manchester. 2007. “Have Folks Delayed Claiming Retirement Advantages? Responses to Modifications in Social Safety Guidelines.” Social Safety Bulletin 67(2): 1-23.

Thane, Pat. 2000. Previous Age in English Historical past: Previous Experiences, Current Points. Oxford, UK: Oxford College Press. 

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U.S. Social Safety Administration. 2024. The 2024 Annual Report of the Board of Trustees of the Federal Previous-Age and Survivors Insurance coverage and Federal Incapacity Insurance coverage Belief Funds. Washington, DC: U.S. Authorities Printing Workplace.

Endnotes

]]> The Fact about Immigrants, Medicare, and Social Safety – Heart for Retirement Analysis https://save-learning.com/the-truth-about-immigrants-medicare-and-social-security-center-for-retirement-research/ Mon, 14 Apr 2025 14:15:34 +0000 http://save-learning.com/the-truth-about-immigrants-medicare-and-social-security-center-for-retirement-research/ Sincere debate can’t begin with fiction.

Lord is aware of it’s finest to remain out of the day-to-day drama of the information cycle.  However, when a distinguished automotive producer and area fanatic at present within the Trump Administration claimed that entitlements are a option to entice unauthorized immigrants to the nation to vote for Democrats, I’ll admit that it caught my eye.  Let’s ignore the truth that unauthorized immigrants can’t vote (and nobody has turned up proof that they fraudulently do in any massive quantity). As an alternative, let’s concentrate on two affordable questions.  First, do unauthorized immigrants seem to make use of entitlement packages – as a retirement researcher I’ll concentrate on Medicare and Social Safety – in a means that might recommend that these packages are a draw? And, secondly, if we considerably expended licensed immigration, would that negatively have an effect on these packages’ funds?

The reply to the primary query is a convincing “no.”  Unauthorized immigrants aren’t eligible for Medicare or Social Safety retirement advantages.  Nor does any proof exist that unauthorized immigrants fraudulently obtain advantages in massive numbers.  In actual fact, to the extent that unauthorized immigrants “take part” in these packages, they accomplish that on the income facet.  That’s, their employers might contribute the FICA tax on their behalf although they’ll by no means get the cash again out. This easy (kind of unfair) reality explains why all of the analysis means that unauthorized immigrants truly enhance the fiscal well being of Medicare and Social Safety.  Briefly, mass deportations will harm the packages’ belief funds, not assist them.

OK, however what if these entitlements are drawing unauthorized immigrants who hope that sooner or later they’ll turn out to be licensed immigrants and even residents?  Presumably, for a lot of of those people, that’s the truth is their dream.  How would that have an effect on Medicare and Social Safety? Right here, the reply is actually extra sophisticated.  New immigrants can pay into the system, obtain advantages, and have kids who’re residents that can then repeat that cycle of cost and receipt. Projecting that future affect is more durable.

However, right here, the proof additionally appears to recommend that immigrants at worst don’t have any affect and at finest are web contributors to the system.  On the Medicare facet, the potential for constructive affect exists largely as a result of immigrants spend much less on well being care than these born in the US.  Determine 1 exhibits the consequence as tabulated by KFF for a nationally consultant pattern.  Throughout each single kind of well being expenditure, immigrants spend lower than the native-born inhabitants.  Summing throughout all of the classes, immigrants spend simply two-thirds what the native born do – $4,875 versus $7,277.  And whereas Determine 1 applies to all immigrants – not simply these 65 plus – that very same research discovered that these on Medicare spend simply 60 % of native-born people.  Along with this decrease spending, immigrants additionally contribute a disproportionate share to Medicare, if for no different purpose than they’re extra more likely to be working-age taxpayers than the native born.

On the Social Safety facet, the potential for constructive affect stems from this similar characteristic – immigrants are sometimes youthful individuals who work. This reality implies that new immigrants contribute to the system at precisely the time we want it – because the Child Boomers age.  Plus, immigrants have extra kids than the native born, that means that they may enhance the variety of folks paying into this system within the longer run too. So, not less than for the subsequent few generations, immigrants and their kids would seemingly be a boon to the system, not a burden.  Certainly, in Social Safety’s projections, situations with greater charges of immigration have decrease programmatic deficits.

Now, to be clear, I’m not saying that we must always simply permit an unrestricted immigration coverage. Reliable questions on immigration reform exist. For instance, would permitting extra licensed immigration decrease the wages of present U.S. staff? If that’s the case, by how a lot and for which staff? Ought to sure professions of want be focused and what are they? And, regardless of the long-term contributions of immigrants to the financial system, how can the short-term prices of training and infrastructure be shared throughout places?  These are all vital questions.

Nevertheless, we are able to by no means get to those types of questions if we begin with the entire fiction that immigrants are coming right here to make the most of entitlements.  If something, these packages make the most of them.

]]> Do We Actually Need Roth Retirement Plans to Be Extra Beneficiant Than Conventional Plans? – Heart for Retirement Analysis https://save-learning.com/do-we-really-want-roth-retirement-plans-to-be-more-generous-than-traditional-plans-center-for-retirement-research/ Wed, 02 Apr 2025 04:29:11 +0000 http://save-learning.com/do-we-really-want-roth-retirement-plans-to-be-more-generous-than-traditional-plans-center-for-retirement-research/ Eliminating required minimal distributions makes Roth 401(okay)s rather more precious.

One thing snuck by me.  The SECURE 2.0 Act eradicated required minimal distributions (RMDs) for Roth 401(okay)s.  At first look, that change appears comparatively innocent.  In any case, the account holders paid taxes up entrance, so why drive them to withdraw their cash.  What that rationale ignores is that the property within the Roth proceed to generate tax-free returns, even after the account holder reaches 73 – the age when RMDs kick in for conventional plans.  That skill to proceed to save lots of tax free makes Roths significantly extra precious. 

A fast refresher on the so-called equivalence between conventional and Roth plans could also be a great way to make clear what has occurred.  Beneath a conventional 401(okay) plan, the federal government doesn’t tax the unique contribution nor the returns on these contributions till the funds are withdrawn from the plan.  In distinction, preliminary contributions to Roths are usually not tax deductible, however curiosity earnings accrue tax free and no tax is paid when the cash is withdrawn.  

Though the normal and Roth plans could sound fairly totally different, the standard argument is that they provide nearly equivalent tax advantages.  Sadly, the best technique to display this level is with equations.  Assume that t is the person’s marginal tax charge and r is the annual return on the property within the plan.  If an individ­ual contributes $1,000 to a conventional plan, then after n years, the stability would have grown to $1,000 (1+r)n.  When the person withdraws the collected funds, each the unique contribution and the collected earnings are taxable. Thus, the after-tax worth in retirement is (1-t) $1,000 (1+r)n.

Now take into account a Roth. The person pays tax on the unique contribution, so he places (1-t) $1000 into the account.  After n years, these after-tax professional­ceeds would have grown to (1+r)n (1-t) $1,000. For the reason that proceeds are usually not topic to any additional tax, the after-tax quantities underneath the Roth and conventional plans are equivalent:

Word {that a} key assumption on this train is that n – the variety of years of accumulation – is similar in each circumstances.  That was true.  In each circumstances, RMDs restricted tax-free accruals.  Now “n” is not the identical for conventional and Roth 401(okay)s.  House owners of conventional plans have to begin taking their cash out at 73; homeowners of Roths by no means need to take their cash out.  (Put up-death minimal distribution guidelines nonetheless apply.) 

One argument for altering the RMD guidelines seems to have been to make the remedy of Roth 401(okay)s according to the remedy of Roth IRAs, which have by no means been topic to RMDs.  Consistency is an effective purpose.  Congress merely flipped the fallacious method. 

Flipping the fallacious method prices the federal government cash.  Proper now, despite the fact that 82 p.c of employers provide a Roth 401(okay) possibility, solely 17 p.c of members take up the provide (see Determine 1).  As extra employees acknowledge the benefits of no RMD, that proportion will improve.  Consequently, the tax expenditure for retirement plans – a wasteful expenditure underneath any regime – will improve.  If Congress is on the lookout for cash, introducing RMDs for Roth IRAs and restoring RMDs for Roth 401(okay)s wouldn’t solely make the tax advantages fairer but in addition elevate revenues.  That needs to be a great factor!

]]> Arrival of First Long-term Mortgages Helped Fueled Baby Boom – Center for Retirement Research https://save-learning.com/arrival-of-first-long-term-mortgages-helped-fueled-baby-boom-center-for-retirement-research/ Thu, 13 Mar 2025 14:40:56 +0000 https://save-learning.com/arrival-of-first-long-term-mortgages-helped-fueled-baby-boom-center-for-retirement-research/ Among the many explanations for the baby boom are rising incomes in the post-war economy, modern appliances that made childrearing more manageable, and lots of women who were no longer working in the factories.

But a new study makes a compelling case for another cause: FHA and VA mortgages that made borrowing money for a house much more affordable for young couples.

These mortgages changed homeownership from a privilege to a viable option for working-class and middle-class couples who wanted to raise a family. Federally insured FHA and VHA loans reduced the upfront cost of buying a house.

The mortgage programs drove the births of an additional 3 million babies between 1935 and 1957, researchers from the Federal Reserve Board and the University of Maryland found. They estimate these births were responsible for about 10 percent of the excess births that formed the baby boom. The boomer wave officially started in 1946 but the analysis dated back to the creation of the Federal Housing Administration in 1934.

Prior to FHA mortgages, downpayments could be almost half of a home’s purchase price. After a few years of paying interest, the buyer owed the full remaining balance on the loan. With FHA’s creation, the modern, long-term fixed-rate mortgage was born. FHA loans, backed by insurance, required only 20 percent down and would be amortized – and eventually paid off – over 20 to 30 years.

In 1944, the loan program for veterans followed a similar model. The VA offered even lower fixed interest rates than the FHA and eliminated downpayments entirely. One group was barred from FHA and VA loans, however: Black Americans, including men who served in World War II. The government and banks viewed Black neighborhoods as too risky for the insured loans.

Nevertheless, FHA and VA loans were wildly popular. Some 10 million of the mortgages were issued between 1935 and 1957, and the U.S. homeownership rate surged from 45 percent to 65 percent. “America was transformed from a nation of urban renters to suburban homeowners,” the researchers concluded.

By 1960, they noted, births in the United States had begun to decline. But the cause of this “baby bust” was probably less about finance and more about an important medical advance. “A critical factor,” they said, “almost surely [was] the advent and spread of modern contraceptive technology.” 

Squared Away writer Kim Blanton invites you to follow us @SquaredAwayBC on X. To stay current on our blog, join our free email list. You’ll receive an email each week – with a link to the week’s article – when you sign up here.  This blog is supported by the Center for Retirement Research at Boston College.

]]> Self-Insuring Your Long-Term Care (and Other Non-Recurring Expenses) https://save-learning.com/self-insuring-your-long-term-care-and-other-non-recurring-expenses/ Mon, 10 Mar 2025 15:03:25 +0000 https://save-learning.com/self-insuring-your-long-term-care-and-other-non-recurring-expenses/ This post is a follow-up to our post of April 16, 2022
regarding planning for non-recurring expenses in retirement, with
emphasis in this post on long-term care costs. We also build on the
example discussed in our previous post.Expenses in retirement are
not generally linear from year to year. That is why simple spending
rules of thumb like the 4% Rule (with or without guardrails), or even
more sophisticated Monte Carlo models that develop probabilities that a
household can spend $X per year in real dollars, frequently fail to
reflect real-world spending in retirement and are, therefore, likely to
miss the mark. Developing and maintaining a robust spending plan in
retirement is a classic actuarial problem involving the time-value of
money and life contingencies. This problem is easily solved utilizing
basic actuarial principles, including periodic comparisons of household
assets and spending liabilities.In our previous post,
we discussed the example couple of John and Mary (two 65-year-old
retirees) originally introduced by Justin Fitzpatrick of Kitces.com. In
his article, Mr. Fitzpatrick indicated that, based on their assets and
some undisclosed assumptions, there was a relatively high probability
that John and Mary could afford to spend about $117,600 per year in real
dollars with $39,600 coming from annual withdrawals from their
portfolio (almost 4% of their initial $1,000,000 portfolio). Using
the Actuarial Financial Planner for Retired Couples (AFP) and our
default assumptions (and an 80%/20% split of essential vs. discretionary
recurring spending), we determined that John and Mary’s Funded Status
(comparison of assets and spending liabilities) was 100.87%, or somewhat
less robust than the financial picture painted by Mr. Fitzpatrick. But,
as noted in our previous post, Mr. Fitzpatrick did not plan for any
future non-recurring expenses for this couple. Let’s see what would
happen to John and Mary’s Funded Status if they decided to plan for
future long-term care costs in addition to their annual recurring
spending. ExampleThe AFP has 6 buckets
for determining the present values of future non-recurring expenses. It
also has 5 “other income” buckets that can also be used to calculate
present values of future non-recurring expenses by entering negative
amounts. These 11 buckets can also be used to calculate the present
values of almost any other non-linear stream of future expenses or
sources of income.To estimate the present value of their future long-term care costs, John and Mary visit the Median Cost Data Tables
at the Genworth Cost of Care website and look up median costs for
assisted living and nursing home care for their current state of
residence, which we will assume is California. They find that for 2024,
the median annual cost for assisted living in California is $75,000 and
the median annual nursing home cost for a semi-private room is
$136,875. John and Mary decide to plan on 2 years of assisted
living and 1 year of nursing home care to occur at the end of Mary’s
lifetime planning period. The average cost for that 3-year period (in
today’s dollars) would be $95,625, but they expect that their recurring
expenses would be reduced by $30,000 (in today’s dollars) for this
three-year period. Thus, they plan on incurring 3 years of extra
expenses of $65,625, in today’s dollars, at the end of Mary’s life. They enter the following amounts into row 41 of the AFP:Annual AmountDeferral Period (yrs)Payout Period (yrs)Annual Rate of Increase% Essential (Liabilities)$150,1452833%100%The
assumed cost starting in year 29 (the $150,145 annual cost in future
dollars shown above) is determined by increasing the average current net
cost of $65,625 developed above with their estimate of annual increases
in long-term care costs of 3% per year for 28 years ($65,625 X 1.03
**28). The annual rate of increase of 3% entered in the spreadsheet
applies for the years once payments are assumed to commence. John and
Mary determine, for their planning purposes, that these long-term care
expenses are not expenses they can simply reduce or eliminate if they
choose to (i.e., not discretionary), so they classify them as “100%
Essential”. This choice affects the discount rate used in the present
value calculations.The AFP determines the present value of this
assumed stream of payments under the default assumptions to be $112,728
(as shown in the PV Calcs Tab). This amount is added to their
liabilities and their revised Funded Status drops from 100.87% to 96.75%
as a result of recognition of this future cost. John and Mary wonder if
there are other non-recurring expenses they might encounter over the
next 30 years that should also be built into their plan, such as:Purchase of new carsLuxury TravelSupport of aging parents or childrenUnexpected home repair or desired home improvementsThey
also wonder if they should use the AFP to model possible future
decreases in their Social Security benefits or the future sale of their
home that were not reflected in their financial advisors model.Static Monte Carlo and 4% Rule Approaches vs. The Dynamic Actuarial ApproachIn
some ways John and Mary prefer the simplicity of their financial
advisor’s proclamation that they have a high probability of being able
to spend $117,600 in real dollars for the rest of their lives. They can
simply increase their spending budget each year with inflation, and they
don’t have to deal with annual budget calculations and possible
adjustments in spending. John complains that the Actuarial Approach
requires periodically thinking about their future spending, re-entering
revised data every year into the Actuarial Financial Planner and
possibly make spending adjustments based on their annually recalculated
Funded Status.Mary reminds John that:It may not be reasonable to simply trust their financial advisor as he does guarantee his resultsTheir
advisor’s assumptions about the future are unlikely to be 100% accurate
and some adjustments will likely be required over the next 30 years to
keep their spending on trackTheir spending is not likely to be the same real dollar amount from year to year, andIt
is a good idea to periodically revisit their plan and discuss their
spending, and it will probably take no more than one hour at the
beginning of each year to recalculate their Funded Status and document
their annual planning valuation.Mary convinces John that
the Actuarial Approach is the more prudent approach for achieving their
goals in retirement and for keeping their spending on track.ConclusionGood
financial planning during retirement involves periodic (we recommend
annual) re-measurement of the household Funded Status and adjustments in
spending when necessary. The re-measurement does not have to involve
simulations but it should involve estimating future expenses, be they
recurring or non-recurring in nature. If your financial advisor’s plan
does not anticipate non-recurring expenses, like long-term care costs,
you should consider using the AFP annually to measure your Funded
Status.

]]> How To Choose The Best Medicare Plan For You https://save-learning.com/how-to-choose-the-best-medicare-plan-for-you/ Thu, 06 Mar 2025 21:03:07 +0000 https://save-learning.com/how-to-choose-the-best-medicare-plan-for-you/  
A question has been plaguing me lately…
 
“How To Choose The Best Medicare Plan For You”

 

I’m turning 62 this month and inching closer to a decision I view with mixed feelings.

 

On the one hand, I’ve heard from many retirees that Medicare is a confusing web of options.  I have a friend who has spent hundreds of hours analyzing the options, and I dread doing that myself.  I’ve only recently begun to read about the topic, and I’m realizing the complexity of the decision ahead.
 
I’m dreading the thought of figuring it all out. (Fortunately, I’ve discovered a solution…read on)
 
On the other hand, there’s the relief of saving some serious money.  We’ve been paying for private insurance since I retired 7 years ago.  It’s expensive, and I’m excited to experience the lower costs associated with Medicare. 
 
I just wish there were an easier way to sign up for Medicare… 
 
Fortunately, I’ve found a great (and easy, and free) solution, and today I’m excited to share it with you.

 

I now know how we’re going to choose the best Medicare for my wife and me.  The great news is, you’re going to be able to use the same solution I’ve discovered, for free!  But I’m getting ahead of myself… 
 

 

 

If you were paying attention, you received an email a few weeks ago announcing my first webinar.  Today, I’m sharing the story behind that webinar, which includes the solution I’ve found for a question that’s been plaguing me:  How To Choose The Best Medicare Plan. 

 

I couldn’t be happier with the solution I’ve found, and I’m excited to share it with you. But first, here’s a reminder in case you missed the announcement:

 

I’m Hosting My First Webinar!
 

Over 1,000 of you have already registered for the webinar (Thank You!).  I’m looking forward to talking with you (and Ari Parker, Graduate of Stanford Law School, Co-Founder of Chapter, and a true Medicare expert). If you haven’t signed up yet, you can sign up here:
 

 
I’ve had numerous readers ask if the webinar will be recorded.  Good News:  We are planning on recording the video, and I’ll send an email to all of my readers with a link to that video when it’s available.
 

The Solution I’m Using To Choose The Best Medicare Plan
 

Here’s the fun part – the story behind the webinar.
 
There’s a reason I’m doing this webinar with Ari. As I started looking into Medicare, I made a conscious decision.  Rather than invest my time researching Medicare, wouldn’t it be smarter to use that time to research Medicare experts instead?  Some areas are best outsourced, and I’ve concluded that deciding on how to choose the best Medicare plan is something I’m comfortable leaving to the experts.
 
Ari Parker: Co-Founder of Chapter

Ari’s company (Chapter) is the solution I’ve found to solve the puzzle of How To Choose The Best Medicare Plan.
 
Solving the Medicare puzzle is what they do.  And they’re good at it.  Very good at it.  Here’s a quick summary:

 

Dave Ramsey uses them for all of his listeners.
They’re independent and unbiased experts on Medicare.
Their advisors do not know the commissions of the products they recommend.
They have an A+ Rating from the Better Business Bureau.
They have a 5.0 rating, with over 2,500 reviews.
Their proprietary software finds your best solution.
It’s entirely free, and there’s no obligation.

A special point on Bullet 3:  This was one of the biggest reasons I chose Chapter.  The reality is that many Medicare “experts” are guilty of being overly influenced by the commissions they receive on various products. One of my biggest concerns was having my advisor recommending something that made them the most money, rather than the product that best matched my needs.  The fact that their advisors are “blind” to the commissions on the products they’re recommending was a big factor in my final decision. 
 
Let me be clear:  I’m not going to try to “sell” you on using them.  I’m simply sharing what I’ve found in my research, and letting you know that I’m going to be using them to help me choose the best Medicare for my wife and me.  I believe they are a great solution to a difficult challenge all of us face, and I wanted to make you aware.

 
Second, rest assured that the webinar will NOT be a sales pitch.  I have asked Ari to focus his presentation on common mistakes people make when choosing a Medicare plan and answering the reader’s questions.  I will mention my new partnership with Ari’s company, but that will be it.  The purpose of the webinar is to provide education to you from a true Medicare expert, NOT to sell you on a solution.
 
Based on the response to the webinar, I know Medicare is a major concern for many of you.  I’m simply sharing what I’ve discovered as the solution I’ll be using to make it a lot easier when it’s my time to decide on a plan. 

 
The Good News – A Solution For My Readers

 

I’ve had numerous phone calls with Ari and his team, and we’ve reached an agreement.  I’ve decided that Ari’s company will be the company I recommend for any of my readers looking for help with Medicare.  For readers of The Retirement Manifesto, they’ll:
 

Help you choose the best Medicare plan for you, at no cost.
Provide expertise in all 50 States, based on the plans available in your area.
Get you signed up with whatever plan you choose.
Conduct an annual review during the “enrollment window” and advise if changes should be made. 
If you’re already enrolled, they’ll review your plan and let you know if it’s the best for you.
Once you’ve talked with them, you’re under no obligation to follow their recommendation.

If you’re interested in talking to them:
 

 
If you prefer to call, simply dial (775) 565-0284. 
 

In full transparency, I’ve entered an “Affiliate Agreement” with Ari’s company, Chapter.  It’s a common arrangement in the blogging world, and it means I’ll get a small commission (at no cost to you) if you decide to use Chapter as your Medicare advisor.  I wouldn’t have entered this agreement if I didn’t believe it was the best solution available, and I’d be recommending them regardless of whether or not I received a commission.   In fact, as a show of good faith, I’ve decided to donate 50% of any commissions earned to charity.  I’m not in this for the money, and I hope I’ve earned enough of your trust at this point for you to recognize my motives are pure.
 
The good news:  you can take advantage of that link, talk with them to get their input on the best Medicare plan (or have them review your current plan and give their recommendation on whether it’s the best plan for you), and then decide you don’t want to go that route and do something else. 
 
There’s no obligation, and it’s always free.
 

Decide For Yourself
 

I wanted to share the full story before you joined the webinar.  Hopefully, you’ll now be watching with a slightly different perspective.  Consider it your opportunity to get a glimpse into Ari’s way of thinking as you review your options for how you’re going to choose the best Medicare plan for you and your family.  If you like what you see, come back to this post and simply click the link to start the process.
 

A Brief Homework Assignment:  Medicare 101 (3 P’s)

 

 

Medicare 101:

 
Traditional Medicare consists of two parts:
 

Part A covers hospital stays and is premium-free for most people but there’s a substantial deductible.
Part B covers doctor visits and outpatient care. The monthly premium is $185/mo for most Americans.

Part D is prescription drug coverage. It’s technically optional, but there’s a late enrollment penalty if you don’t sign up in time.  It’s crucial to understand that Original Medicare (Part A and Part B) is not comprehensive health insurance.  So, the key question is:

 
How will you cover the 20% Medicare doesn’t cover?

 
The good news is that there are only two options to cover the 20%.
 

– Option 1 is to choose a Medicare Supplement (Medigap) plan, which sits on top of your Original Medicare and allows you to see any Medicare provider nationwide.

– Option 2 is a Medicare Advantage plan, which is an “all-in-one” alternative to Original Medicare offered by private insurers. These bundled plans typically include Part D drug coverage and extras like dental and vision. They often have lower premiums than Medigap but come with network restrictions and other rules.

 

When deciding between Original Medicare (Parts A & B) plus a separate drug plan versus an all-in-one Medicare Advantage plan, consider these “3 P’s”:
 
Providers:  Is it important to keep your current doctors?  With Original Medicare, you can see any provider nationwide who accepts Medicare.  Most Advantage plans have restricted networks.

Prescriptions: How much do you spend on medications?  Compare Part D and Advantage plan formularies and costs for the drugs you take.  An inexpensive plan may cost more in the long run if it has high prescription copays.

Priorities:  What do you value most in a health plan – low premiums, extra benefits, simplicity, flexibility, or minimal out-of-pocket costs? Advantage plans often have low premiums but more restrictions. Pairing Medigap with Original Medicare costs more monthly but covers more with less complexity.
 

In closing, it’s important to note that every Chapter Advisor is trained to use their proven 3 Ps Method to review each Medicare beneficiary’s providers, prescriptions, and priorities — “ensuring that every client receives the high-quality healthcare they need and deserve at the best value.”

 

 

 

I’m so impressed with the company that I’ve decided to partner with them. I realize Medicare is a concern for many of the readers of this blog, and I wanted to share the solution that I’ve decided to use personally.  Yes, I have an Affiliate Partnership with them, but my motives are pure.  I think they’re the best solution available, so I’m sharing it with you.  If you know of a better solution, drop a comment below.  Let’s work together to solve a frustratingly complex issue for all of us – How To Choose The Best Medicare Plan.
 
As a next step, I’d encourage you to join the free webinar and see what you think.  At a minimum, you’ll learn a lot about Medicare from a true expert.  At best, you’ll be on a path to figuring out how you’re going to choose the best Medicare plan for your family.  If you haven’t yet, click the button below to register for the webinar:
 
Register For the Webinar.
 
Then, make your own decision.  If you’ve already heard enough and want to get started with Chapter:
 
Click This Link To Talk With Chapter (Affiliate Link)
 
If you’d rather call, dial (775) 565-0284. 

 
I’m excited about being able to provide this solution to my readers.

 
I know there’s a real need, and I hope others can benefit from the solution I’ve chosen for myself.
 

Your Turn:  If you’re already on Medicare, what process did you use and how confident are you that you chose the best Medicare plan for you?  If you’re not yet on Medicare, are you intimidated by the decision?  How are you planning to go about making the decision?  Let’s chat…
 

Chapter Advisory, LLC (“Chapter”) is a private health insurance agency. In California, Chapter does business as Chapter Insurance Services (Lic. No. 6003691). Chapter is not affiliated with or endorsed by any government entity. While Chapter has a database of every Medicare plan option nationwide and can help you to search among all options, it has contracts with many but not all plans. As a result, Chapter does not offer every plan available in your area. Currently, Chapter represents 50 organizations which offer 18,601 products nationwide. You can contact a licensed Chapter agent to find out the number of products available in your specific area. Please contact Medicare.gov, 1-800-Medicare, or your local State Health Insurance Program (SHIP) to get information on all of your options. Enrollment in a plan may be limited to certain times of the year unless you qualify for a Special Enrollment Period or you are in your Medicare Initial Enrollment Period.

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