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.

Retirement not what many were expecting, and not in a good way: Sun Life survey

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My latest Financial Post column, which is on page FP 3 of Tuesday’s paper, looks at a Sun Life retirement survey released this morning. You can find it online by clicking on the highlighted headline: Canadians finding retirement is not all it’s cracked up to be.

So if you think Retirement is about eternal sea cruises and African safaris, you may be abashed by the Sun Life finding that almost one in four (23%) describe their lifestyle as a frugal one that involves “following a strict budget and refraining from spending money on non-essential items.”

Furthermore, many can expect to still be working full-time at age 66, which just happens to be my own age. And as you can see from this blog, I’m still working, if only on a self-employed semi-retirement basis.

In fact, among the 2150 employed Canadians polled by the 2019 Sun Life Barometer poll conducted by Ipsos, almost half (44 per cent) expect they’ll still be employed full-time at age 66. Among the “frugal” retirees still working after the traditional retirement age, 65 per cent say it’s because they need to work for the money rather than because they enjoy it.

In an interview, Sun Life Canada president Jacques Goulet mentioned most of the main reasons, few of which will come as a surprise to this blog’s readers. Mostly there is a failure to plan for Retirement early enough to save the kind of sums involved. Another familiar culprit is the ongoing decline of employer-sponsored Defined Benefit pension plans, which are becoming more and more rare in the private sector. Most of us can only envy the tax-payer backed guaranteed inflation-indexed DB pensions enjoyed by most government workers, politicians and some members of labor unions: a bulletproof source of income that you can’t outlive.

47% at risk of outliving their money

The alternative for many are employer-sponsored Defined Contribution pensions (DC plans), group RRSPs or personal RRSPs and TFSAs, which means taking on market risk and longevity risk. Both are challenges in the current climate of seemingly perpetual low interest rates and ever volatile stock markets, not to mention rising life expectancy. Even then, Goulet told me Canadians with DC pensions are leaving a lot of money on the table: $3 or $4 billion a year in “free money” that is obtainable if you enrol in a DC pension where the employer “matches” the employee contributions: typically 50 cents for every $1 contributed.

Finally, there is a large group that have no employer pension of any kind, or indeed any steady job with benefits, and these people are unlikely to have saved much in RRSPs or even TFSAs, which they should if they can find the means. This group may account for a whopping 47% of working Canadians, Sun Life finds, and about the only thing they’ll be able to count on in Retirement is the Canada Pension Plan (CPP) as early as age 60, Old Age Security at 65 and probably the Guaranteed Income Supplement (GIS) to the OAS. These people would be better off continuing to work till 70 in order to get higher government benefits, a time during which they can build up their Tax-Free Savings Accounts (TFSA)s. TFSA income does not impact CPP/OAS/GIS, which is not the case for RRSPs and RRIFs.

Finally, a word about continuing to work into one’s 60s and even 70s. I know many who do, and not always for the money. I’m in the latter category myself, even though personally my wife and I could be considered the poster children for maximizing retirement savings, living frugally and investing wisely. There are worse things in life than going to a pleasant job that provides mental stimulation, structure and most of all purpose. Many of these ideas are explored in the book I jointly co-authored with Mike Drak: Victory Lap Retirement.

 

Healthy Aging: 8 tips for staying healthy after Retirement

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By Kelsi Burley

Special to the Financial Independence Hub

Just because you get into your old age it doesn’t mean you have to slow down and stop exploring and living your life. A study by the U.S. Center for Disease Control found senior adults who were still in employment had better health than retirees of the same age. And older adults who worked in physically demanding jobs had the best health overall.

Physical activities are great for promoting health and keeping your mind sharp after retiring. The following are eight simple and fun things you can do to an awesome retirement:

1.) Find other people to exercise with

What makes a fun activity even more interesting is doing it with good buddies. If you can find just two people who share your interest for biking, mountaineering, cycling, bowling, or even fishing, you will find that your days start to get more interesting; and you will feel more energized and creative.

2.) Combine physical and mental exercise for healthy aging

One of the ways you can take care of both your physical and mental health is by taking up a less strenuous activity that engages both body and mind. So swimming can be great for your mental and physical health, but yoga is even better because it strengthens the muscles and joints, helps you to build energy, and promotes calmness and mindfulness: both qualities we need to stay healthy.

3.) Start watching TV with friends

Perhaps at a local joint where you can then walk home and grab some food on the way (basically establishing a routine that allows you to stay in contact with other people, and not withdrawing to yourself). Simple things like watching football in your neighborhood with people whose company you enjoy may not appear so important when you’re younger and obsessed with growing your business or attaining career goals, but when you’re older and left with few physical pursuits, finding time to enjoy the little things will help to keep you grounded and content. Continue Reading…

Retired Money: Should big savers still fear outliving their money?

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MoneySense.ca: Photo created by freepik – www.freepik.com

My latest MoneySense Retired Money column looks at the topic of whether average savers transitioning to Retirement really need to fear outliving their money. The piece picks up from a blog this summer from Michael James on Money, which will be republished in its entirety tomorrow here on the Hub.

You can access the full MoneySense column by clicking on the highlighted text: How long will your retirement nest egg last?  In addition to citing Michael J. Wiener’s work, the piece passes on the views of two prominent recently retired actuaries: Malcolm Hamilton and Fred Vettese, as well as my co-author on Victory Lap Retirement, ex corporate banker Mike Drak.

Like this blog, despite being online the column’s scope is somewhat constrained by a word limit. In fact, in an email, Hamilton told me he didn’t think such a topic could be addressed in just 800 or 900 words.

Actuary and retirement expert Malcolm Hamilton

“Why? We presume that good advice is universal … that it applies to everyone. It does not, particularly when addressing concerns about running out of money. For years I have looked for evidence that large numbers of seniors spent too much and suffered as a consequence. I haven’t found anything persuasive.”

No one knows how much Canadians should save or how quickly they should draw down their savings after retirement, Hamilton added: “Some people are frugal. They save heavily before retirement and spend sparingly after retirement, leaving large amounts to their children when they die. We all want parents like this. Others are spendthrift. They save little before retirement and live frugally after retirement because they have no money except government pensions.”
Finding balance between extremes of Over-Saving and Over-Spending

Give the powerful gift of Decluttering to your Loved Ones

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By Akaisha Kaderli, RetireEarlyLifestyle.com

Special to the Financial Independence Hub

Stuff, stuff, and more stuff!

My sisters and I were fortunate.

My Mother was a very forward-thinking individual. Years before she (and my Father) died, Mom started going through her closets, her paperwork, her jewelry, the items in her safe, her garden area and the storage shed next to it.

She tossed items that were outdated, expired, and the things that were no longer useful to her household. She gave away cherished items, met with a lawyer, updated her will, and made funeral arrangements.

Neighbors and friends thought it was odd but comforted themselves by saying “that’s just Betty.”

Mom, on the other hand, knew exactly what she was doing.

The years were passing by, and she didn’t want her daughters to be burdened with having to clear out piles of stuff from her home after she and her husband died. She had the foresight to put her affairs in order before the events of their deaths.

These days, the courtesy and care of what my Mom was doing now has a name. It’s called dostadning, a hybrid of the Swedish words for death and cleaning.

Not everyone is on board

My Father was much more of a patterned man. He liked his routines and his schedule. Mom? She was a tornado.

I truly think it made him nervous to have familiar (but no longer useful) items be given away or tossed out. He learned long ago not to quibble, and he picked his battles. He didn’t help Mom prepare for the inevitable, but he didn’t stand in her way, either.

Differing styles of dealing with life and death

Over the years since my parents’ passing I have watched friends and other family members deal with the demise of loved ones: in-laws, close friends, siblings or their own Mother or Father. In every case, the chaos left after a death was totally overwhelming.

In the situations where the loved one downsized after retirement, it was easier. Few people would carry pay stubs from the 1940’s into a newer, smaller home. But that was not always the case.

Many people get comfortable – not being able to let go of the past – with children’s bedrooms not touched since they left the house and married. Or countless boxes in the attic of holiday items that are no longer used, or grandchildren’s drawings and painted rocks jealously kept for their loving memories.

All well and good … except that when one passes on, these mementos are left for family members to sort out.

When the adult children go through all this — stuff — full-blown emotional meltdowns or something close to it can happen during the process. Sorting through a loved one’s home after a death is the last thing anyone feels like doing.

Morbid or renewing?

I get it.

No one wants to be chased by the idea of the Grim Reaper at their door. But keeping what you love – and getting rid of what you don’t – isn’t morbid. It’s more like a relief, like a renewal.

There is something very empowering and healthy about taking care of your own space and making it more organized. Clutter is really just a bunch of decisions that you’ve put off making. Most of the junk we have is simply stuff screaming out for a place to be or a decision to be made. Keep it (not countless duplicates) in its place or get rid of it.

Approaches to clearing your clutter

There are lots of ways to get started. There’s the brutal approach, the simple approach, and everything in between.

Brutal begins like this: If your home burned down, what would you replace? Continue Reading…

Retirement planning software and the 70% Rule

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By Ian Moyer

(Sponsor Content)

Individuals who are following conventional retirement-planning may be in disbelief as they approach retirement and discover that they cannot afford to retire just yet or are likely to outlive their retirement funds.

The 70% Rule

Common practice is to save enough so that your annual retirement income equals about 70% or more of your current income. Of course, many Canadians are not aware of such information entirely and have saved little or not enough for their retirement.

With this being said, there are still some fundamental issues with this understanding. One, few people have a complete understanding of their retirement resources or a realistic view of their retirement funds. In some cases, 70% retirement pay usually isn’t enough to sustain them in retirement.

Example

We’ll use the fictitious name Tom for this example. Tom is making $60,000 annually living a modest lifestyle. Tom will qualify for CPP and OAS. Tom only contributes through his employer-directed contribution program, which is $2500 a year.

Tom also saves $13,000 in a regular checking account, an additional $3,000 in non-registered savings and $12,000. Tom is a conservative investor and he thought he was doing pretty well saving what he can and living a modest lifestyle.

Using Cascades to do retirement planning at the age of 54 using the above figures. Tom discovers his annual income will only be approximately $38,250. After taxes per year. Going back to the common practice of 70% Tom needed minimum $42,000 per year as retirement income. This leaves Tom needing to find a way to make an additional $3750 a year. Tom would need a part-time job, choose not to retire or drastically change his lifestyle in retirement.

For a lot of individuals, they will have to work longer than they planned or seek part-time employment during retirement. This could be a problem for retirees and employers. In order to navigate this issue before it starts employers need to assist their employees with retirement planning.

Sample Cascades recommendations for maximizing an estate

How can we change this?

The first step would be for employers to become more effective at helping employees realistically prepare for and manage their retirement. For example, this could include a process or program to build up wealth accumulation prior to retirement, which could be a mix of LIRA, Capital Gains or RRSP just to name a few.

A second step would be for employees to change their behaviours and thoughts around retirement savings. Employees can make changes by becoming more proactive when it comes to saving. When some individuals think about saving for retirement after they attend school, buy a home, raise children and send them to college sometimes it can be too late. Continue Reading…