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.

Lessons we learned in 2020

 

By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

“Improvise, Adapt, and Overcome” – Marine slogan

What a year!

We have heard from friends and family how happy they are to see the year 2020 in their rearview mirror. Can’t argue with that. Yet, in my opinion, 2020 brought us great lessons, from which we can benefit.

Solid plans often break

Often our Readers will say they have just a few more things to settle, a few more “I’s” to dot and “T’s” to cross before retiring. They’re waiting for the health care issue to be settled, waiting for the bonus check next year, waiting to hit “this” particular financial number, waiting for next year to sell their properties … they’re waiting …

Personal Financial Independence was put off until this imaginary perfect time, and then finally, for 2020 they planned a year of travel. But BAM! COVID broke out or, in some cases, one of the spouses became gravely ill with a disease and that not only shook them up but forced them to shelve all excursion plans.

Ask yourself, “What are you waiting for and why?” Then ask yourself if you have a Plan B for these unexpected situations.

Lots of people wait until they graduate from law school or get the degree or wait until they get married, or until they buy that perfect house, or until they hit that magic number to retire: in order to be happy.

They live for tomorrow and forget all about the pleasures and happiness of today.

Stop settling, start livingNOW.

You’re not going to get anything in Life by playing it safe. There are no guarantees.

Lesson learned: Faith over Fear, Don’t Worry be Happy

We only have control of ourselves.

I  get push back on this one, sometimes. Usually it falls under the “You don’t understand” category.

But if you think about it, stuff happens.

We can’t control a loved one getting ill, can’t control that our children or spouse don’t do what we prefer. We don’t have a lot of say in international peace relations. Whether our children get divorced, COVID breaks out, there’s a huge business loss or politics don’t go our way – all we have control over – is our response to the situation.

If you are feeling out of control on your moods, get help. There are lots of tools to clarify your mind and calm yourself down and lots of services available to you. Don’t let the stress build up until you have an even worse situation happen.

Lesson Learned; Life is not in our total control: only our response to it is.

Relationships change

Relationships were cemented or lost this year. Yeah, this was a big one.

Once again if you think about it, when you got married, had a child, moved cross-country, got that promotion, contracted a serious illness, got divorced, retired early or hit any other life milestone, did some friendships recede?

Most likely.

Life is change and sometimes your better future lies ahead of you, without those loved people in them.

Yes, it IS difficult to let go of habits and people. We’ve all been there at different points in our lives. It’s better to process the loss and continue to move forward, creating the life of our dreams, than to become bitter and angry over the loss.

In my opinion, 2020 was a year of clarification.

What I mean is, yup. Things fall away. Sometimes beloved things and people. I think this helps us to focus on what really matters to us. This is a blessing in disguise and you will be stronger for it.

Lesson Learned; As you grow, some relationships won’t make it into your future.

Fear seemed ever-present

When we are afraid of something, chances are, we don’t know much about it. Our perceptions are skewed because of this.

Remember the old saying: FEAR is False Evidence Appearing Real?

Take control and choose to find out more. The knowledge you discover will give you options and open up doors for you. Question the thoughts you are thinking and the beliefs you are holding. Fear does not serve you in any way and will only force you to contract, limiting your options even further.

This is a choice. Continue Reading…

How Travel prepares you for the unexpected

Lake Atitlan, Guatemala

By Billy and Akaisha Kaderli

Special to the Financial Independence Hub

Even before we met, as individuals, Billy and I have always loved to travel.

I have written about my cross-country adventure on the back of a motorcycle when I was 19. Billy also traveled with his van to Guatemala in the 1970s and back again to his hometown of Cincinnati, Ohio.

As a couple we lived and journeyed through Europe for six months before we purchased our restaurant in Santa Cruz, California.

These trips were life-changing experiences and we just got hooked on adventure.

When we left the traditional work force in 1991, we sold everything and began to travel the world. These experiences forced us to be flexible even when we didn’t want to be.

Power outages

For instance, when we lived on the tiny island of Nevis, West Indies, every afternoon or early evening, the power in our home would go out. It could happen at 4pm or at 7:30, but it would happen. Lights would go out and the TV would click off (right as the plot thickened in the movie we were watching). The pump bringing water to the kitchen sink or toilets wouldn’t work without the electricity, so things like doing the dishes, taking a shower or using the restroom had to be prepared for in advance.

We read books by flashlight or had discussions on future travel plans.

No running water!

Speaking of taking a shower, in Nevis we shared the Governor of Nevis’s home with other housemates who were opening the Nevis Four Seasons Resort on the island.

Aside from us and Billy’s best friend who was the head chef, all the rest of the roomies were young twenty-somethings and used to First World Living. One young woman would start her hot shower, go to the kitchen, toast bread, smother it in peanut butter and jelly, eat the sandwich, then return to a steam-filled bathroom with the water still running and take her hot shower.

As natural water-savers ourselves, we thought this was over the top.

However, we had no idea how much so, until one day … we found out the cistern was empty. The only way the tank was filled was by rain that fell or by water trickling out of the city’s pipes from 10 am to 11 am daily. And by trickle, we mean drizzle by drop.

Our spectacular house in Nevis, West Indies with a view of the Atlantic Ocean

We were out of water, with all the conveniences that running water brings to living, so how were we going to take a shower?

Being in the tropics, rain came fairly regularly, like every other day or so. One morning around 9:30, it was a typical tropical downpour. Billy and I saw the flooding of water through the gutters and into our rain barrels and we both grabbed towels and soap. Moving a barrel and standing under the drainpipe of the gutter we lathered up and enjoyed this pleasure of a beautiful shower out in nature. The jungle and sugar cane fields pushed up against our house, and we had a straight shot of Nevis’ volcano. Spectacular.

Then … the rain stopped.

Oh Lord. There we were, soaped up, naked, and out in our back yard when the maid popped in for her thrice weekly cleaning. Continue Reading…

Another emotional reason to take CPP early

By Michael J. Wiener

Special to the Financial Independence Hub

 

For some reason, people seem wired to want to take their CPP and OAS benefits early, myself included. They grasp for reasons to justify this emotional need even though a rational evaluation of the facts often points to delaying the start of these pensions to get larger payments. I recently read about another emotional reason to justify taking CPP and OAS early.

We can choose to start taking CPP anywhere from age 60 to 70, but the longer we wait, the higher the payments. Less well known is that we can start taking OAS anywhere from age 65 to 70 with higher payments for waiting loger. It’s hard for us to fight the strong desire to take the money as soon as possible, and we tend to latch onto good-sounding reasons to take these pensions early.

But the truth is that most of us have to plan to make our money last in case we live long lives. Taking CPP and OAS early would give us a head start, but the much-higher payments we’d get starting at age 70 allow us to catch up quickly. If we live long lives, taking larger payments starting at age 70 is often the winning strategy.

Here I examine reasons to take these pensions early, ending with a longer discussion of the reason newest to me. Many of these reasons are inspired by other writing, such as a Boomer and Echo article on this subject. However, you’ll find my discussion different from what you’ll see elsewhere.

Let’s start with the best reason.

1.) You’re retired and out of savings

This is a good reason to take pensions early if you’re really running out of savings other than a modest emergency fund. However, just wanting to preserve existing savings isn’t good enough on its own. It makes sense to do a more thorough analysis to see what you’re giving up in exchange for trying to preserve your savings.

2.) You have reduced life expectancy

If you’re sufficiently certain that your health is poor enough that you’d be willing to spend down every penny of your savings before age 80, then this is a good reason to take pensions early. This is very different from “I’m worried I might die young.” If as you approach age 80 you would try to stretch out your savings in case you live longer, this has repercussions all the way back to how much you can safely spend today. Almost all of us have to watch how we spend now in case we live a long life. In this case you need to do a thorough analysis to see what you’re giving up in exchange for taking pensions early.

3.) You have long periods before age 60 with no CPP contributions

If you don’t work after age 60, but delay taking CPP until 65, the 5 years without making CPP contributions can count against you. Everybody gets to drop out the lowest 17% of their contribution months in the CPP calculation. So, if you never missed a year of CPP contributions from age 18 to 60, you can just drop out the years from 60 to 65, and you won’t get penalized. But if you had many months of low contributions over the years, then having additional low months from 60 to 65 will reduce your CPP benefits.

I am in this situation. However, from 60 to 65 you go from receiving 64% to 100% of your CPP plus any real increase in the average industrial wage. Taking into account all factors, I expect my CPP to rise by about 47% by delaying it from 60 to 65. This is less than it could have been without the penalty of not working from 60 to 65, but it is still a significant increase.

Delaying CPP further from 65 to 70 is a simpler case. There is a special drop-out provision that allows you to not count the contribution months between 65 and 70. CPP benefits increase from 100% of your pension at 65 to 142% at 70.

CPP benefits rise significantly when you delay taking them. Even if you can’t use your 17% drop-out for all the contribution months from age 60 to 65, you may still benefit from delaying CPP.

4.) You want to take the CPP and OAS and invest

People don’t generally get this idea on their own. It often comes from a financial advisor. You’re unlikely to invest to make more money than you’d get by delaying CPP and OAS, particularly if you pay fees to a financial advisor.

5.) The government might run out of money to pay CPP and OAS

The government might introduce wealth taxes on RRSPs too. Despite what you might have heard from financial salespeople, CPP is on a strong financial footing. Many things may change in the future. It doesn’t make sense to overweight the possibility of cuts to CPP or OAS.

6.) You want the money now to spend while you’re young enough to enjoy it

My wife and I are retired in our 50s. When I analyze how much we can safely spend each month, the number is higher when we plan to take both CPP and OAS at 70. That’s right; we can spend more now because we plan to delay these pensions. It works out this way because CPP and OAS help protect against the possibility of a long life. Continue Reading…

Mapping your Aging Journey: Review of Options Open

By Mark Venning, ChangeRangers.com

Special to the Financial Independence Hub

Over umpteen years, my ideal number, working as a career consultant, the most significant rewards came about in one to one conversations, notably with clients seeking new career directions in later life, with the unique pleasure of meeting my oldest client who on the day we met was two months shy of turning ninety.

Rare this was and I wish I could tell more here, but to say the least, his was an adventuresome journey, not without challenge but certainly lived with sociability, creativity and curiosity.

So imagine how startling it was, with all my years of listening to hundreds of stories of later life journeys suddenly in mind, that I began the new book Options Open by Sue Lantz hearing an invitation call in the first chapter to “start with curiosity.” The Options Open book subtitle is The Guide to Mapping Your Best Aging Journey,” and so serves as an artfully laid out roadmap using travel planning as a relatable metaphor, useful in practical conversations with partners, friends or even an eclectic mix in a Zoom group.

Skillfully promoting self-reflection, practicality and of course curiosity, this later life travel planning guide works with an interconnected “Five Strategy Framework” that charts a course taking you through your: Health, Home, Social Network, Caregiving Team and Resources (financial and otherwise). This is the book I wish I had to supplement all those later life career conversations, when many people saw a road ahead through a narrow lens; eying a fated future as a so called Retirement, almost like a vanishing point.

Book does not restrict itself to the word Retirement

Two positive overall attributes of this book instantly drew me into it. First, Sue Lantz thankfully does not hinge the book on that restrictive word Retirement, which is certainly not a travel planning guide destination I’ve ever seen. If travel can be metaphoric for our aging journey, I agree with Sue when she says from the onset, Successful aging is a process that involves making several transitions.” That goes for all our trips through airports or train stations in our life course; we are much on foot in transition.

However, it can’t be escaped: reference to Retirement plops quietly in a few places in this book. Try as we might over the last twenty years, other books have made multiple contemporary rewrites to recast the vocabulary for a dated concept or social construct Retirement, while still casting it as a state you reach in later life. Most of these attempts miss the mark or leave gaps that Options Open addresses sagaciously.

The second prominent point to make about Options Open is that in the category of aging and longevity, it is the first book I have read, published in 2020, written with a consideration to the context of a COVID world. In the book’s Preface, Sue positions the relevance of working with this book in our current time:

“Our world changed dramatically during the global COVID-19 crisis. We realized what is essential to our daily life … We directly experienced the link between how prepared and proactive we are as a society, and how this plays out in terms of our individual risks, and whether or not our own health (and life) is maintained.”

Still further, Sue confirms something I have often reflected upon after many conversations I have been part of this year: “… our worst fears were amplified during the COVID-19 pandemic. Yet, if we let our fears stop us from thinking about our own aging, we are actually discriminating against ourselves.” As I write this post, COVID world continues unabatedly, but if you are leaning to a hermit’s way, perhaps the curious pilgrim in you might emerge to make time to explore your options.

If you have been at home more this year, it is somewhat fitting that one of the strategy areas in the Options Open framework covers the topic of Aging in Place. This might be as good a time as any to think forwardly about the right place, and as Sue Lantz accurately puts it in the section Consider YOUR choice of place, “Your best housing plans will be guided by how well this sets you up to achieve the other four Strategies, including your healthcare access, social networks, and caregiving resources.”

Two coincidental thoughts come full circle in my mind that underscore for me how timely this book is and why I recommend it as one that makes you think realistically and therefore one you can actually use.

It was three years ago this week in 2017, that I heard Sue Lantz speak at the National Institute on Ageing (NIA) where she talked about acting like Pixar – “animating aging in place” – animating the options that is, by co-creating, co-locating to build as a whole, what I prefer to call age inclusive communities. As Lantz went on to say, we are dealing with a diversity of issues across the board, which are interconnected. Looks like the concept of her book grew shoots back then.

Most hauntingly, I also recall when in Chicago, 2004 – I heard William Bridges, author of Transitions: Making Sense of Life’s Changes – a book that stands the test of time, (first published in January 1980) speak on “Finding Your Own Way”. At the end of his talk, you could hear a pin drop. The Bridges Transition model is classic and stemming from it is a statement he made that lingers still from that day: “Uncertainty is a fluid state that allows for openings”.

We are in a fluid state these very days, so as that allows – why not find our Options Open.

Review Part 2: Continue Reading…

Retired Money: RRSP must start winding down after you turn 71 but TFSA is a tax shelter that lasts as long as you do

My latest MoneySense Retired Money column has just been published and looks at the twin topic of RRSPs that must start to be converted to a RRIF after you turn 71, and the related fact that the TFSA is a tax shelter you can keep adding to as long as you live. You can find the full column by clicking on the highlighted headline: How to make the most of your TFSAs in Retirement.

Unlike RRSPs, which must start winding down the end of the year you turn 71, you can keep contributing to TFSAs for as long as you live: even if you make it past age 100, you can keep adding $6,000 (plus any future inflation adjustments) every year. Also unlike RRSPs, contributions to Tax-free Savings Accounts are not calculated based on previous (or current) year’s earned income.  Any Canadian aged 18 or older with a Social Insurance Number can contribute to TFSAs.

Once you turn 71, there are three options for collapsing an RRSP, although most people think only of the one offering the most continuity with an RRSP; the Registered Retirement Income Fund or RRIF.  More on this below but you can also choose to transfer the RRSP into a registered annuity or take the rarely chosen option of withdrawing the whole RRSP at one fell swoop and paying tax at your top marginal rate.

Assuming you’re going the RRIF route, all your RRSP investments can move over to the RRIF intact, while interest, dividends and capital gains generated thereafter will continue to be tax-sheltered. The main difference from an RRSP is that each year you must withdraw a certain percentage of your RRIF and take it into your taxable income, where it will be taxed at your top marginal rate like earned income or interest income. This percentage start at 5.28%  the first year and rises steadily, reaching 6.82% at age 80 and ending at 20% at 95 and beyond.

Some may be upset they are required to withdraw the money even if it’s not needed to live on. After all, you’re gradually being forced to break into capital, assuming you abide by some version of the 4% Rule (see this article.)

in 2020 only, you can withdraw 25% less than usual in a RRIF

For 2020 only, one measure introduced to cushion seniors from the Covid crisis was a one-time option to withdraw 25% less than normal from a RRIF; so if you turned 72 in 2020 you can opt to withdraw 4.05% instead of 5.4%. Continue Reading…