Longevity & Aging

No doubt about it: at some point we’re neither semi-retired, findependent or fully retired. We’re out there in a retirement community or retirement home, and maybe for a few years near the end of this incarnation, some time to reflect on it all in a nursing home. Our Longevity & Aging category features our own unique blog posts, as well as blog feeds from Mark Venning’s ChangeRangers.com and other experts.

4 ways Life Insurance can fund Retirement

Posted By Financial Independence Hub | September 14, 2022

By Lucas Siegel

Special to the Financial Independence Hub

The infamous retirement crisis that’s been talked about for years just became real, with inflation and interest rates reaching record highs in the past few months. Consumer prices skyrocketed by 9.1% as of June 2022, the largest increase we’ve seen in 40 years. Couple that with a growing senior population living off a fixed income, many of which retired early during the pandemic, and you have yourself a massive problem.

Most senior Americans are unaware that their life insurance policy could be one of their most valuable liquid assets. Contrary to popular belief, life insurance isn’t just a way to care for loved ones after you die through the death benefit. In fact, permanent life insurance policies can also be used to access funds for retirement planning and healthcare when you need it most. Life settlements are legal throughout the US and regulated in all except six states, as well as the provinces of Quebec and Saskatchewan in Canada.

Regardless of age or financial standing, understanding the true value of your assets is essential to living out the retirement you deserve. Check out the following four ways you can use your life insurance policy to help fund retirement:

1.) Sell your life insurance policy through a life settlement

For millions of Americans who own a life insurance policy, selling it through a life settlement can be a great way to access cash when it’s most needed. A life settlement involves selling a life insurance policy for lump-sum cash payment that is more than the cash surrender value, but less than the death benefit. Despite decades of industry innovation and growth, some 200 billion dollars[US$] in life insurance is lapsed each year that could have been sold as a life settlement.

While the life settlement process once took two to four months, AI technology has expedited the process, making it easier than ever the get a life settlement valuation. Policyholders can now use a free life settlement calculator to instantly see how much their policy is worth based on a few simple questions. Just as you track the value of your house on Zillow or your car on Autotrader, understanding the value of your life insurance policy is critical to make the best financial decisions for you and your family.

2.) Obtain the cash value from a permanent policy

When you pay your premium on a permanent life policy, only a portion goes toward covering the cost of your life insurance. The remainder of these payments goes into an investment account where cash value can grow on a tax-deferred basis. As you age, you’ll also eventually be able to tap into the interest earnings from this investment account to help keep your policy active, thus bringing down your out of pocket premium payments. Essentially, the money in this account can be treated as emergency savings with tax advantages.

3.) Borrow from your policy through a loan

Americans with whole life insurance that have accrued enough cash value to cover the debt can also use their policy as collateral through a whole life loan program. One major benefit is the interest rate will be much lower than what you’d see with credit card debt or an unsecured personal loan. This allows the policyholder to get a one-time, tax-free distribution that can be paid off with interest in life, or be withdrawn from your life insurance policy’s death benefit. Retirees might be able to go through their insurance carrier if whole life loans are offered, or utilize a third-party whole life loan program instead. Continue Reading…

Moshe Milevsky and Guardian Capital unveil a Modern Tontine in new Retirement solution

Posted By Jonathan Chevreau | September 8, 2022

A revolutionary new approach to preserving portfolio longevity through a modern “Tontine” structure was unveiled Wednesday by Guardian Capital LP and famed author and finance professor Moshe Milevsky.

GuardPath™ Longevity Solutions, created in partnership between Guardian and Schulich School of Business finance professor Milevsky, is designed to address what Nobel Laureate Economist William Sharpe has described as the “nastiest, hardest problem in finance” ¹

Announced in Toronto on September 7, a press release declares that the “ground-breaking step” aims to “solve the misalignment between human and portfolio longevity.” See also this story in Wednesday’s Globe & Mail.

Over the years, I have often interviewed Dr. Milevsky about Retirement, Longevity, Annuities and his unique take on how the ancient “Tontine” structure can help long-lived investors in their quest not to outlive their money. Milevsky has written 17 books, including his most recent one on this exact topic: How to Build a Modern Tontine. [See cover photo below.]

Back in 2015, I wrote two MoneySense Retired Money columns on tontines and Milevsky’s hopes that they would one day be incorporated by the financial industry. Part one is here and part two here. See also my 2021 column on another pioneering Canadian initiative in longevity insurance: Purpose Investment Inc.’s Longevity Pension Fund.

Addressing the biggest risks faced by Retirees

In the release, Milevsky describes the new offering as a “made-in-Canada” solution that addresses “the biggest risks facing retirees and are among the first of their kind globally. Based on hundreds of years of research and improvement and backed by Guardian Capital’s 60-year reputation for doing what’s right for Canadian investors, I am confident these solutions will revolutionize the retirement space.”

Milevsky’s latest book is on Modern Tontines

In an email to me Milevsky said: “You and I have talked (many times) about tontines as a possible solution for retirement income decumulation versus annuities. Until now it’s all been academic theory and published books, but I finally managed to convince a (Canadian) company to get behind the idea.”

In the news release, Guardian Capital Managing Director and Head of Canadian Retail Asset Management Barry Gordon said that “for too many years, Canadian retirees have feared outliving the nest egg they have worked so hard to create.” It has answered that concern by creating three solutions that aim to alleviate retirees’ greatest financial fears: The three solutions are described at the bottom of this blog.

With the number of persons aged 85 and older having doubled since 2001, and projections suggesting this number could triple by 2046,² Guardian Capital says it “set out to create innovative solutions that this demographic could utilize when seeking a greater sense of financial security.”

Tontines leap from Pop Culture to 21st Century reality

Tontines were one of the most popular financial products for hundreds of years for individuals willing to trade off legacy for more income, Guardian says. Once in a while the tontine shows up in popular culture, notably in the film The Wrong Box, where the plot revolves around a group of people hoping to be the last survivor in a tontine and therefore the recipient of a large payout.

“With our modern tontine, investors concerned about outliving their nest egg pool their assets and are entitled to their share of the pool as it winds up 20 years from now,” Gordon says, “Over that 20-year period, we seek to grow the invested capital as much as possible to maximize the longevity payout. Along the way, investors that redeem early or pass away leave a portion of their assets in the pool to the benefit of surviving unitholders, boosting the rate of return. All surviving unitholders in 20 years will participate in any growth in the tontine’s assets, generated from compound growth and the pooling of survivorship credits. This payout can be used to fund their later years of life as they see fit, and aims to ensure that investors don’t outlive their investment portfolio.” Continue Reading…

Retired Money: All about the OAS boost at age 75 and implications of deferring OAS and CPP benefits

Posted By Jonathan Chevreau | August 25, 2022

My latest MoneySense Retired Money column looks at a rare 10% boost of Old Age Security (OAS benefits) Ottawa recently confirmed for seniors aged 75. As you’ll see there are plenty of implications and points to consider for those who are younger and contemplating deferring OAS to 70, or indeed CPP.

You can find the full column by clicking on the highlighted headline here: Delaying CPP and OAS — Is it worth the Wait?

The National Institute for Aging (NIA) confirmed OAS payments for Canadians aged 75 or older will be hiked 10%: the first permanent increase in almost 50 years. The NIA’s Director of Financial Security Research, Bonnie-Jeanne MacDonald, and Associate Fellow Doug Chandler said in the release the best way for retirees to maximize this boost is to defer OAS benefits for as long as possible, either by working longer or by using their savings to fund the delay.

By now, most retirees are aware they can boost Canada Pension Plan (CPP) benefits by 42% by delaying the onset of benefits from age 65 to 70, or 0.7% for each month of deferral after 65. What’s less well known is that a similar mechanism works for OAS. Unlike CPP, OAS is never available before age 65, but by delaying OAS benefits for 5 years to age 70, you can boost final payments by 36%, or 0.6% more for each month you delay benefits after 65, according to the NIA. Before the August increase at age 75, the NIA said average Canadians would “leave on the table” $10,000; but after factoring in the new increase, they would now lose out on $13,000 by taking OAS at 65.

MacDonald and Chandler noted there are three other reasons to postpone OAS benefits: Reduced clawbacks of the Guaranteed Income Supplement (GIS) after age 70; Better OAS benefits despite clawbacks for those with more retirement income: and Increasing residency requirements. On point one, it says lower-income seniors wishing to avoid GIS income-tested clawbacks could draw down on RRSP savings to defer and boost OAS benefits, thereby preserving GIS payments after 70. On point 2, those subject to OAS clawbacks may find the age 75 boost in combination with delaying benefits may increase benefits but not the clawback. And on point 3, waiting may mean more years of residency for those who have not lived their entire years in Canada: to qualify for OAS you need to have been a Canadian resident for at least 10 years after age 18, so the five extra years of waiting for benefits could add to the payout.

However, on the first point retired actuary and retirement expert Malcolm Hamilton says it’s true deferring OAS until 70 and drawing more from your RRIF to compensate, means your RRIF income after 70 will be smaller and OAS pension larger. “However, by not drawing OAS until 70, low-income seniors will forfeit the full GIS benefit before 70. This doesn’t look like a good plan to me.” Continue Reading…

How to take advantage of rising interest rates

Posted By Financial Independence Hub | August 4, 2022

By Bob Lai, Tawcan

Special to the Findependence Hub

Lately, the talk of the town seems to be rising interest rates. In April, the Bank of Canada raised the benchmark interest rate by a whopping 0.5% to 1%, making it the biggest rate hike since 2000. Given the high inflation rate, it is almost a given that these rate hikes will continue throughout 2022 and beyond. [On July 13, 2022, the BOC hiked a further 1%: editor.]

But before you freak out, let’s step back and look at the big picture. At 1%, the benchmark interest rate is still relatively low compared to the past interest rates.

I still remember years ago before the financial crisis, being able to get GIC rates at around 5%. And some people may remember +10% interest rates in the 80s or early 90s. Back then, interest rates were much much higher than measly below 1% rates we’ve been seeing the last decade.

Age Tech: a Coming of Age Story?

Posted By Financial Independence Hub | July 21, 2022

By Mark Venning, ChangeRangers.com

Special to the Financial Independence Hub

Is Age Tech a Coming of Age story?

Well you might think so, given all of sudden it seems, how far but quickly we’ve come, to where we’re at now, this point in 2022. While on the one hand Age Tech is a coming of age story, in the world at large it is either unheard of, or if it is heard of in some circles, it is either misunderstood or too confusing in its jumble of jargon for everyday people to grasp. Even some in this emerging industry question whether Age Tech is the best term to use. So what’s the story?

Perhaps we should start at the beginning with once upon a time. Simply the story goes, in the 1970s some engineers, industrial designers and gerontologists were curious and asked a question about how technology could join up with the field of aging studies and, as noted in the 2009 publication Defining Gerontechnology for R&D Purposes: they “recognized the need for a conceptual framework.”

Along came the 1980s, the marriage of gerontology and technology: Gerontechnology. Originator of that term in 1988, Jan A.M. Graafmans was part of a research team in Eindhoven University of Technology, “that started an effort to develop a program of research and education in gerontechnology aiming at further integration of engineering sciences with those disciplines already involved in aging studies.” Read his The History and Incubation of Gerontechnology.

As an inter-disciplinary, academic and research field, Gerontechnology established itself in 1997 forming the International Society for Gerontechnology (ISG). Speaking of jargon, at the best of times Gerontechnology is a mouthful to say let alone to understand fast. On the ISG website it is described as “designing technology and environment for independent living and social participation of older persons in good health, comfort and safety.”

Fast forward. My journey with technology and aging began in 2013 when Stanford Centre on Longevity kicked off its Longevity Design Challenge competition. In 2015 I followed Canada’s newly formed technology and aging network AGE-WELL. To appreciate the development of Gerontechnology, I highly recommend the 24 collected papers compiled by editor, Sunkyo Kwon – Gerontechnology: Research. Practice and Principles in the field of Technology and Aging. [cover on the left]

But even then all this did not quite make a coming of age story. Until now. Roughly since 2020, Age Tech has become the fast term that has at least made for an easier conversation starter. The real secret in explaining what it means is the ability to link up the Age Tech talk to the human needs it services. All you need are three examples everyday people can identify with, such as health and home care, mobility and transportation & social connection.

Avoiding the risk of overwhelming you here, to prove that there is a real coming of age marketplace for Age Tech, there are several new resources that can help you quickly do your own research; and no doubt some of you may have experienced some of the products available, even if their brand recognition is low.

Recently published (2022) is the book by Keren Etkin – The AgeTech Revolution. If you want to be bedazzled before you read the book, on Etkin’s website The Gerontechnologist you will find a very busy Age Tech Market Map filled with brand logos under various categories and sub-categories from health and wellness to tech-enabled home care.

Early in March at last AGE-WELL with help from the Centre for Technology Adoption for Aging in the North (CTAAN) published Canada’s Agetech Startup Map (seen at the top of this blog). Actually if you click on the logos on the PDF link you will find the websites for all the brand names featured. On the CTAAN web page for Age Tech you will find links to products listed under six clear topic headings, some more products not listed on the Agetech Startup Map.

If you think this is all hype and are not yet convinced that Age Tech has arrived at its coming of age, then you soon should be convinced after you check out some of what I’ve highlighted here. Try some of this out as a conversation starter next time you meet up with friends to test market awareness as it were. And because I can’t resist I’ll leave you with one more.

Poking around as I do, to see what’s covered on Age Tech in other parts of the world, I found a snappy article What is Age Tech? by Andreea Toma, dated 2020 from a UK based marketing agency Creative Quills (love that name.) Toma’s quill keeps it simple: “AgeTech is an emerging group of technologies which seeks to improve the lives of older adults.”

Mark Venning is a writer, speaker, researcher and advisor on the business, technology, health & social aspects of ageing and longevity which include changing concepts in a longevity society for Age Inclusive Communities. He is an Associate Member of the International Federation on Ageing.