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Imagine an Economic Ice Age in the United States
Tweet Share on Facebook August 31, 2012 CommentWhen the Boeing 707 began flying in 1958, the age of mass jet travel was launched, ushering in an economy-boosting increase in the speed of transport for people and goods. More than half a century later, planes have gotten bigger, quieter, and more fuel efficient. They haven't, however, gotten any faster. In fact, to conserve fuel, commercial jets today fly more slowly than in the past.
Therein lies an enormous problem in the eyes of Robert Gordon, an influential Northwestern University economist. In a recent paper, itself a summary of a forthcoming book, Gordon argues that the kinds of innovation-driven productivity gains that fueled decades of impressive U.S. growth may have disappeared.
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Get Ready for 5 Key Money Changes in 2013
Tweet Share on Facebook August 29, 2012 CommentPotentially painful changes in federal tax and benefit rules are scheduled to take place at the beginning of next year. Taxpayers of all stripes stand to be affected, and the window for 2013 planning is closing fast. With Labor Day just around the corner, it's not too early to spend some time thinking about your financial planning for next year.
[See 12 Ways to Increase Your Social Security Payments.]
Review these five sets of changes and decide how they might affect you.
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Older Entrepreneurs Active, But Pace is Down
Tweet Share on Facebook August 28, 2012 CommentEven before the Great Recession, older entrepreneurs led the way in new business formations. The trend has continued in recent years, although the rate of new-business formation dipped in 2011 after being flat in 2010.
"The United States might be on the cusp of an entrepreneurship boom—not in spite of an aging population but because of it," the Ewing Marion Kauffman Foundation said in a 2009 report that remains its most recent detailed look at aging and entrepreneurship. Kauffman backs major entrepreneurship research, including annual reports on new business formations and an ongoing look at the experiences of 5,000 businesses begun in 2004.
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America is Hurting Financially, But Seniors Aren't
Tweet Share on Facebook August 27, 2012 CommentIn yet another study of how bad things have been going for Americans who don't happen to be wealthy, the Pew Research Center last week issued a disheartening report about the "lost decade" that the middle class has experienced. The recession, and particularly the collapse of home values, has continued to pummel what used to be the core strength of the nation.
The middle class is both poorer and smaller than it used to be. And Pew's assessment is just one of many bleak conclusions reached by experts who have been sifting through this dismal data. People who lost jobs during the recession have struggled to find new ones, often accepting enormous salary cuts when they've been fortunate enough to become re-employed.
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5 Reasons Older Folks Tune Out the News
Tweet Share on Facebook August 24, 2012 CommentIt is hard to find an expert today who has much good to say about the retirement outlook for older Americans. There is not enough money. Working until 70 or even 75 is a necessity, not a positive lifestyle choice. Healthcare problems and costs are the two primary growth industries for seniors. Medicare and Social Security are on the ropes.
Even good news about longer life spans is being spun into the negative reality that this just means our meager nest eggs are more likely to run out before we die. Adding some guilt to the mix, baby boomers are not the greatest generation but the greediest one, saddling younger people with enormous deficits in entitlement programs.
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New 401(k) Expense Reports Greeted with Yawns
Tweet Share on Facebook August 22, 2012 CommentNew and far-reaching government rules require that 401(k) plans send out new reports by the end of this month to tens of millions of employees and other plan participants. The new reports require the plans to lay out details about expenses, fees, and other charges. While some 401(k)s have done this for years, the new rules require a standardized and detailed report that has been praised by consumer groups as badly needed and long overdue.
[See How to Use New 401(k) Fee Reports.]
In making their arguments, supporters of the new reports drew upon extensive consumer research showing that 401(k) plan investors do not understand the fees they pay, and most mistakenly believe their plans are free. In fact, 401(k) plans can charge considerable fees, especially for management and investment expenses of the mutual funds that are the core offerings of most 401(k)s. In extreme cases, high-fee plans invisibly drain substantial sums from investors' retirement nest eggs over time.
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Is Our Aging Population Partly to Blame for the Slow Recovery?
Tweet Share on Facebook August 21, 2012 CommentAs the unusually weak economic recovery continues, you've at least got to wonder if future studies of what ails us will include our aging population as a material cause. Simply stated, older people tend to liquidate assets to fund their retirements. Younger people tend to acquire financial assets as their personal wealth rises and they build their own nest eggs.
[See 10 Cities With the Oldest Population.]
The United States has enjoyed nearly 40 years where the number of people acquiring assets was greater than the number of people disposing of them. This condition is being turned on its head. We now face roughly 40 years where there will be more people in this country wanting to sell financial assets than buy them. This supply-demand shift could put a lid on asset values and depress overall economic growth.
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Medicare Election Season: Fact and Fiction
Tweet Share on Facebook August 20, 2012 CommentMedicare, by nearly all accounts, has been a wildly successful healthcare program for older Americans. Begun in 1965, it has provided a steadily growing menu of health benefits at prices that consumers could not afford were it not for government subsidies and Medicare's market clout with insurers and healthcare providers to restrain their price increases.
But these rising expenses and the program's central role in health reform have brought it into the election-year crosshairs of both political parties. Democrats and Republicans often use the same numbers to support starkly different conclusions or, as likely, just misuse data to score points with voters. (We'll use President Barack Obama and Republican challenger Mitt Romney as the stand-ins for their parties here in future references.)
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Health Reform Testing Home-Based Care
Tweet Share on Facebook August 17, 2012 CommentThe health reform spotlight usually focuses on the 2014 requirement that most people buy health insurance, the creation of new state health insurance exchanges, and whether states will participate in the law's big increase in Medicaid services. But under the radar, the law has also triggered a flurry of new programs searching for better and cheaper ways to provide healthcare.
One of them, the Independence at Home (IAH) demonstration project, could have a huge impact on seniors with chronic illnesses. With growing numbers of older Americans, many of whom will post impressive longevity gains, rising healthcare costs are a national and personal problem. If the IAH test is successful, it would point the way toward lowering costs and also boost the broader provision of home-based healthcare services, thus helping seniors age in place in their homes and avoid institutionalized care.
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Social Security Will Soon End Paper Checks
Tweet Share on Facebook August 15, 2012 CommentThe movement to direct deposit of Social Security benefits is nearly complete. More than 52 million beneficiaries receive their payments electronically, and about 3.3 million—only 6 percent—are still paid with paper checks. Disability recipients of Supplemental Security Income payments are less likely to have made the switch. Nearly 1.5 million SSI recipients, or more than 17 percent, are still getting paper checks as of this month.
By next March, U.S. Treasury Department rules will require most people to have switched to electronic payments. Under its "Go Direct" program, people can have federal benefit payments deposited directly into their bank or credit union account or put into a Direct Express Debit MasterCard card account. Paper checks will continue for a limited number of hardship cases and people in their 90s, but the number of allowable waivers will dwindle over time.
