Introducing the subscription newsletter!
Dear RetirementRevised.com subscriber,
Welcome to the new subscription edition of the newsletter. Starting this week, I’m expanding the newsletter to deliver a deeper dive into news and trends about retirement and aging. My aim is to provide a must-read weekly summary of developments for retirement and aging professionals - and for anyone else with a deep interest in the field. Not every story - just the ones that matter most from the perspective of a journalist who has been covering the beat for nearly 15 years now.
Why expand the newsletter now?
The 65-and-over population of the U.S. will nearly double over the next three decades, from 48 million to 88 million by 2050. That will make us a much older country – 21 percent will be over age 65, up from 13 percent in 2010 and 10 percent in 1970. How we handle the challenge of an aging nation will be one of the most important news stories in the coming years. Many of the most important pillars of retirement security face challenges in the years ahead, including Social Security, Medicare, retirement saving, pensions, and senior housing. The newsletter will keep you up-to-date on these topics and more, with the convenience of delivery straight to your email in box.
The newsletter will be free during September; beginning in October, it will distributed to paid subscribers only. (I also plan to continue publishing a brief free newsletter every so often, so please stick around even if you don’t plan to subscribe!)
The subscription newsletter will include summaries and links to my latest articles for Reuters, Morningstar, WealthManagement.com and other news outlets. But the report also will include a curated summary of other developments on the beat that catch my eye - stories by other journalists, links to significant new studies by respected researchers, and links to conference presentations. My aim is to serve up a weekly digest on all the news of significance on retirement and aging. It will be published 48 times annually on Friday afternoons (and sometimes on Saturday).
The subscription fee will be $10 per month. You can cancel easily at any time, so I hope you’ll give it a try. Click here to subscribe.
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Now, on to this week’s news . . .
Safeguarding wealth against cognitive decline
The aging brain isn't well-suited to financial decision-making.
A growing body of research shows that cognitive decline starts to reduce our ability to make good decisions about credit in our mid-50s, and our investing decision-making skills fall significantly after 70. More than half of the U.S. population over age 85 suffers from some level of cognitive impairment, according to research by the Center for Retirement Research at Boston College. Within that group, 27 percent have dementia and another 37 percent have some level of mild cognitive impairment.
This cognitive decline leaves older people vulnerable to financial fraud and abuse. Combine that with several other trends and you have a perfect storm of financial risk: the increasing reliance on self-managed retirement income through individual savings and 401(k) accounts, growing use of debt by older households, and more problems with computer security and hacking.
Perhaps most worrisome, confidence in our ability to make sound financial decisions does not decline commensurate with cognitive loss. One study found quite the opposite: confidence in financial decision-making ability increases with age.
Regulators and lawmakers have recognized the threats and have taken action. But there also are proactive steps you can take on your own to guard against these risks. The protective steps are worth considering for yourself--but also for aging parents who could be vulnerable. Learn more in my column this week at Morningstar.com.
Court cases aim to rein in age discrimination in hiring
Dale Kleber is an experienced attorney, but when he spotted an ad back in 2014 for a corporate law position that specified “no more than seven years of experience,” he applied anyway.
At age 58, Kleber had extensive experience working for law firms, as an in-house general counsel and in general management jobs. But he had been out of work since the summer of 2011, when he lost his job as the CEO of a dairy industry trade association.
Kleber’s extensive search for senior-level general counsel positions had proved fruitless, so he had re-trained his search to include more junior positions. But even his application for this position had gone nowhere. Carefusion, a medical device and services company had not call him in for an interview for the “senior counsel” positions, and it ultimately hired a 29-year-old candidate for the job.
But Kleber, who lives in suburban Chicago, thought the seven-year cap on experience described in the job ad violated the federal Age Discrimination in Employment Act of 1967 (ADEA), which protects the rights of workers age 40 and older. “Very few attorneys are practicing law who have more than seven yrs and are not 40 years old, or older,” he says. The discrimination was blatant.”
Kleber brought a lawsuit against CareFusion that has a chance to improve the odds workers face proving age discrimination in hiring.
The Kleber case revolves around a legal concept known as “disparate impact,” which occurs when a policy appears to be non-discriminatory, but still has a disproportionate impact on a class of people who enjoy protection under the law. Kleber’s claim is that the seven-year experience cap effectively weeded out all older applicants, making it a “disparate impact,” claim.
The first court that heard the case dismissed it, saying that job applicants could not bring a disparate impact claim under the ADEA. But in April, a panel of the 7th U.S. Circuit Court of Appeals overturned those positions, agreeing with Kleber. Becton, Dickinson and Company which now owns CareFusion, petitioned for a re-hearing by the full court, which occured this week.
Troy Kirkpatrick, the company’s senior director of public relations, said the company denies that it discriminated against Mr. Kleber. “Fostering an inclusive and diverse culture is at the very heart of our core values,” he said. “BD is deeply committed to providing equal employment opportunities and a workplace free from discrimination.”
The first court that heard the case dismissed it, saying that job applicants could not bring a disparate impact claim under the ADEA. But in April, a panel of the 7th U.S. Circuit Court of Appeals overturned those positions, agreeing with Kleber. Becton, Dickinson and Company which now owns CareFusion, petitioned for a re-hearing by the full court, which occurred this week.
Troy Kirkpatrick, the company’s senior director of public relations, said the company denies that it discriminated against Mr. Kleber. “Fostering an inclusive and diverse culture is at the very heart of our core values,” he said. “BD is deeply committed to providing equal employment opportunities and a workplace free from discrimination.”
Observers think the case could wind up before the U.S. Supreme Court, depending on the outcome of the re-hearing. If the en banc decision favors Kleber, there would be a difference of opinion between the 7th and 11th circuits, creating the opportunity for the case to go to the high court.
This is one of several lawsuits now working their way through the courts dealing with alleged age discrimination in hiring practices. Another case, filed in December by the Communications Workers of America, against T-Mobile, Facebook and other companies, charges that the companies discriminate against older workers through use of advertising that micro-targets only younger candidates. Another case charges that employers who recruit exclusively on college campuses are practicing age discrimination.
The ADEA clearly covers employees claiming disparate impact, but the current legal battle focuses on whether it does protect applicants as well. The question is important. A recent AARP survey found that more than 90 percent see age discrimination as “somewhat or very common” in the workplace, and 44 percent of older job applications say they have been asked (illegally) for age-related information from potential employers.
Sustainable investing moves into fixed income
Environmentally-sustainable investing (ESG) continues to grow quickly, with assets growing 37 percent last year, according to Bloomberg. Most of the action has been in equities, but Bloomberg reports that activity is now ramping up in fixed income products as “wealthy investors and foundations increasingly want to align their entire portfolios with their social mission but are finding few opportunities to do so in fixed income.” Of almost 1,900 ESG funds tracked by Bloomberg, 15 percent invest in fixed income, vs. 62 pecent in equity. Areas to watch include development bank credit, green bonds, muni bonds, real estate and community development financial institutions.
Separately, Investment News reports that the Department of Labor, which oversees retirement-plan funds, published guidelines that said ESG investments based aren't always a "prudent choice" and that such factors shouldn't "too readily" be considered as economically relevant by fiduciaries. That differs from 2016 guidance from the Obama administration, which said such plans could consider ESG factors without violating their fiduciary duty, opening the way for more retirees to pursue socially-responsible investment strategies.
Merrill Lynch: commissions are back
Merrill Lynch made a big fuss in 2017 about its decision last year to ban commission-based retirement accounts in response to the Department of Labor's now-defunct fiduciary rule. Now that the rule has been vacated, commissions will be back at Merrill. Planner and blogger Michael Kitces notes that most of Merrill’s accounts already have been converted to a fee-based structure.
Strictly speaking, problem isn't the ACCOUNT. It's about the standard to which the advisor advising ON the account is held.
In the meantime, Merrill already converted most to fee-based...
"Merrill Lynch brings back commission-based retirement accounts" https://t.co/GtdW0HzpaZ
Don’t want to pay property taxes? Defer them.
The cost of property taxes can be a big problem for retirees living on fixed incomes, often determining whether they can stay in their homes. But Money magazine reports that two dozen states have property tax deferral programs that are available to older homeowners who want to put off paying real estate taxes for as long as they remain in their home. It’s a sort of public option reverse mortgage - when program participants sell or pass away, the state claims the balance of what they owe, plus interest, from their home equity.
New life for bias suit brought by lesbian senior against senior living community
In 2016, a gay resident of a senior living facility in Niles, Illinois filed a lawsuit in federal court charging that she has been subjected to a barrage of verbal and physical abuse by a small group of residents. In the suit, Marsha Wetzel accused the housing center and its managers of failing to protect her from hostile residents who have insulted and verbally abused her. The suit claimed that she had been pushed, shoved and spit on, and that she was injured, including bruises on her arm, a bump on her head and a black eye. The lawsuit accuses management of the facility, Glen St. Andrew’s, not only of failing to meet its responsibility to stop the harassment but of retaliating against her for complaining about the abuse and seeking to push her out of the facility.
I first wrote about Wetzel’s case for The New York Times. After the story appeared, the U.S. District Court for the Northern District of Illinois granted Glen St. Andrew Living Community’s request to dismiss the Marsha Wetzel’s lawsuit. But late last month, the U.S. Court of Appeals for the Seventh Circuit overturned that ruling and held that Glen St. Andrew Living Community in Niles, Illinois, can be held accountable for purposefully failing to protect Wetzel.
If Wetzel’s case ultimately is successful, it could set a legal precedent establishing the responsibility of housing providers to actively address discrimination based on gender orientation and sexual identity under the federal Fair Housing Act.
In this video, Wetzel discusses her situation at Glen St. Andrew.
Widows usually fire financial advisers hired by their late spouses
Few widows are prepared financially for the loss of a spouse, according to research released this week by Merrill Lynch and Age Wave. More than half of widows say they and their spouse did not have a plan for what would happen if one of them passed away; 76 percent of married retirees say they would not be financially prepared for retirement if their spouse passed; following the death of a spouse, half of widows experience a household income decline of 50 percent or more.
Oh, and by the way - 70 percent leave their husband’s financial advisor within a year of the husband’s death, according to Vanguard.
Tweet of the week
The only way to fund 60 years of retirement with a million bucks is to totally ignore the math. https://t.co/ggMcju7zOG
September 5, 2018