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.

Almost half of North American Boomers may delay Retirement over Savings Concerns

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Almost half of North American’s young baby boomers would consider postponing retirement because of Savings concerns, a survey out Wednesday finds. Even so, more than half  surveyed had to retire early, often because of circumstances beyond their control.

Franklin Templeton’s 2019 Retirement Income Strategies and Expectations (RISE) survey found that 21 per cent of Canadian young baby boomers (ages 55 to 64) in pre-retirement have not saved anything for retirement. And in the United States, 17 per cent of young boomers are in a similar predicament.

13 to 15% expect to work until they die

As a result, 46% of young Canadian boomers and 48% of young American boomers are considering postponing retirement, with roughly 15% of Canadians and 13% of Americans expecting to work until the end of their life. Furthermore, 22% of self-employed Canadians don’t ever plan to retire.

However, things don’t always go as planned: 54% of young Canadian boomers and 60% of their American counterparts retired earlier than expected, compared to 32% and 37% of Canadian and American older boomers aged 65 to 73.

More Canadian young boomers retired due to circumstances beyond their control than Canadian older boomers (34% versus 20%, respectively). There was a slightly wider gap amongst Americans: more American young boomers retired due to circumstances beyond their control than American older boomers (33% vs 17%, respectively).

Boomers in different life situations after post 2009 bull run

“In 2009, when equity markets started to recover, many young boomers were moving up the career ladder; whereas older boomers were approaching retirement at the top of their earning years,” said Duane Green, president and CEO, Franklin Templeton Canada. “A decade later, after a long bull market run, young and older boomers are in different life situations once again. We see many older boomers benefitting from the transfer of wealth from their parents, yet the young boomers have had a challenging experience balancing more expensive lives – due to caring for elderly parents and still having financially dependent children – all while saving for that increasingly elusive retirement.”

Nearly a quarter (24%) of Canadian young boomers in pre-retirement currently support a dependent family member, compared to 9% of retired older boomers. The top three sacrifices young boomers made for dependents were: saving less money, cutting back personal spending and withdrawing from personal savings. They were least likely to use employer vacation time or take unpaid time off work for caregiving.

“With life expectancy increasing and retirement savings becoming ever more challenging, due to the high costs of living, we are seeing increased concern over having enough money for retirement across all generations,” said Matthew Williams, SVP, Franklin Templeton Canada. “Although it’s never too late to start saving, the best time to start contributing to retirement savings vehicles is when a person starts out in their career and may not have big financial commitments like a mortgage or childcare costs: and to find a way to maintain healthy savings habits as they age.”

Those employed by companies offering group RSP or pensions that allows employees to make contributions directly from their paycheque — and perhaps receiving a company match to their contributions — should fully take advantage of this and potential ‘free’ money, as it will assist their retirement nest egg in compounding over time, Williams said.

Americans more concerned about medical expenses in Retirement

Of those Canadians who plan to retire within five years, 86% expressed concerns about paying expenses in retirement. 27% of these Canadians nearing retirement ranked lifestyle as their top concern, compared to 17% of Americans.

Continue Reading…

Work Optional: Retire sooner to live your best life

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By Vicki Peuckert Cook

Special to the Financial Independence Hub

If you’ve spent any time reading about personal finance lately, you’ve likely heard about the “FIRE” movement. FIRE means Financial Independence – Retire Early.

Suze Orman got headlines by announcing she hated the FIRE movement (but she changed her position a few weeks later.) While Clark Howard “FIRE’d” before it ever became a popular thing to do. (If you think “retire early” doesn’t pertain to you, I strongly urge you to keep reading!)

Whether you agree with people who want to retire early in their 30s or 40s or not, it’s not hard to support the idea of becoming financially independent. Making work optional at some point so you can choose how to live your best life makes good sense.

Tanja Hester and her husband, Mark Bunje, left their careers behind to retire early (at ages 38 and 41) after reaching financial independence. Tanja’s new book, Work Optional – Retire Early the Non-Penny-Pinching Way teaches you how to get there too: no matter when you start or what age you’ll be when you leave work for the last time.

Retiring Is about your life, not just your money

It’s hard to think about retirement without focusing on money. After all, retiring without a solid financial plan – especially retiring early – is a recipe for disaster.

Tanja clearly explains what a bad idea it is to think you can just get back into the workforce if you run out of money in retirement. Her conservative advice is to Make Your Plan Bulletproof by diversifying your “magic money” sources.

Tanja doesn’t just tell you what to consider. She provides action steps and detailed information on ways to shore up your finances before quitting your day job for good.

What I really love about Work Optional is how Tanja embeds the importance of financial planning within retirement life planning. She redefines money as a tool to “help you live your best life as soon as possible.”

This helped me think about early retirement less as a race to get done with work but as a path to defining “living” according to your own terms.

Work Optional is organized in 3 main sections:

  • Determining what kind of life will thrill you
  • Creating a conservative financial plan to be able to live that life
  • Adapting to live your best “post-work” life

You can see that crafting and living your retirement dreams bookend the part of retirement planning most people really focus on: money. But Tanja doesn’t let you skip the tough questions you need to answer in order to transition to living the retirement you want.

She knows there is more to it than money, and she asks you to dig deep and engage with the most critical person in your retirement planning: YOU.

You have to do more than read

If you’re on this site, you probably listen to podcasts and read plenty of articles, blog posts, and books focused on personal finance. When I started on my own FIRE journey, I read everything I could find. Even with all of the information I had, I was still hesitant to act.

Did I really understand what I was reading? What if I missed something and made a mistake? Did new information come out that would help with my retirement planning? Continue Reading…

Retired Money: Work Optional and the FIRE movement

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My latest MoneySense Retired Money column looks at the so-called FIRE movement: (an acronym for Financial Independence/Retire Early), as well as a new book by a FIRE blogger titled Work Optional. You can find the full column by clicking on the highlighted headline here: How “Work Optional” can fit into your Retirement Plan.

You’ll see that regular Hub blogger Doug Dahmer — founder of the Retirement Navigator planning software — has been using the phrase Work Optional for at least five years, even though the new book of that name was just published in January 2019. It’s a useful phrase that describes the kind of thing Mike Dark and I refer to as Victory Lap Retirement in our jointly authored book of the same name.

There are many ways to describe this phase, but generally it refers to a period after full-time employment. FIRE proponents often declare that they “retired” in their 30s or 40s but of course most of them do not spend the next half century doing absolutely nothing. They really create encore careers based on self-employment, and often build businesses based on book-publishing, blogging and public speaking, wherein they reveal “how they did it.”

Victory Lap and Findependence

To some extent this very website does a similar thing, focused as it is on Financial Independence, or my contraction of it, Findependence. Continue Reading…

Federal Budget 2019: Liberals unveil $22.8 billion in new spending in pre-election budget

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Not surprisingly, the Liberals’ fourth federal budget released Tuesday afternoon is the predicted pre-election spendathon targeting the two big voting blocks of Seniors and Millennials. You may wish to refresh this link from time to time, or check my Twitter feed at @JonChevreau. Also check out FP Live’s “Everything you need to know about Federal Budget 2019.”

One of the first reports out was the CBC: Liberals table a pre-election budget designed to ease Canadians’ anxieties. It said that Morneau’s fourth budget includes $22.8 billion in new spending. The 460-page document is titled Investing in the Middle Class. Not surprisingly, the CBC noted, there is no timeline for erasing the Deficit, projected to be $20 billion next year, then falling to $15 billion two years later, and then to $10 billion in 2023-24.

First-time home buyers can tap RRSPs for $35,000

As predicted, the Budget targets Millennials who are finding it hard to get a foot on the housing ladder. It  boosts the amount of money that can be withdrawn from RRSPs for a first-time home purchase, from the previous $25,000 to $35,000 ($70,000 for couples). Low-income seniors will be able to keep more of the Guaranteed Income Supplement (GIS) if they opt to remain in the workforce and safeguards are being introduced to protect employer pensions in the event of bankruptcies.

Among other spending initiatives is ensuring access to high-speed Internet by 2030 across the country, $1.2 billon over three years to help First Nations children access health and social services, an additional $739 million over five years to repair water systems on First Nations reserves, and a federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with sticker prices below $45,000.

Little wiggle room in a Recession

The Financial Post’s Kevin Carmichael filed a piece headlined “Liberals leave themselves little wiggle room in the event of a recession.” And Andrew Coyne commented that “the federal budget is a testament to the pleasures of endless growth. Forget productivity, tax cuts or investment.” One of his colourful quips was this:

“I’ve said before that these are deficits of choice, rather than necessity. A better way to describe them might be deficits for show.”

The Globe noted that the $23-billion in new spending spans more than a hundred different areas, although the focus is on new home buyers and training programs for workers. Later this year there will be $1.25 billion (over 3 years) “First Time Home Buyer Incentive” managed by the Canada Mortgage and Housing Corporation. The Globe added that “CMHC would put up 10 per cent of the price of a newly constructed home and 5 per cent of an existing home, and share in the homeowner’s equity.” To qualify you must be a first-time home buyer with annual household income below $120,000.

8 ways personal finances will be affected: GIS, CPP & more

G&M personal finance columnist Rob Carrick listed 8 ways the budget will impact ordinary citizens’ finances. He noted that seniors receiving the GIS will be able to earn $5,000 without affecting benefits, up from $3,500, and that there will also be an additional 50% exemption of up to $10,000. Contributors to the Canada Pension Plan who are 70 and older and haven’t applied for benefits will be “proactively enrolled” starting next year. Carrick said Ottawa says about 40,000 people over 70 miss out on CPP benefits averaging $302 a month. He also writes that the tax break on stock options will be limited for employees of larger, mature companies (as opposed to startups), with annual caps of $200,000 on stock options eligible for preferential tax treatment. Continue Reading…

Enable, don’t label … but whatever you do don’t call them ‘seniors’!

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By Yvonne Ziomecki, HomeEquity Bank

Special to the Financial Independence Hub

When you are a marketer you tend to look at advertising through a different lens than everyone else – sometimes you are critical, sometimes curious, and sometimes you just admire the genius.  But it’s hard to assess your own advertising through the same lens, especially when you are in your mid forties and the product you market is for people who are retired.  That’s when you call for help!

Last summer our company HomeEquity Bank, provider of CHIP Reverse Mortgages, launched new advertising campaign through a series of humorous ads developed and based on research insights, addressing the fact that older Canadians see themselves as active and able and completely in control of financial decisions related to their home.

Specifically: staying in the home they love.  Our research showed that 93%+ of older Canadians want to age in place.  We also learned that 80% of older Canadians don’t want to be called ‘Seniors’ and most prefer no labels to describe them or their peer group.

In order to better understand if our ads were hitting the mark we engaged the neuroscience research firm Brainsights to study the unconscious brain activity of 300 Canadian Boomers. Research participants were presented with approximately 1 hour of advertisements including our ads, other ads, movie trailers, promotional videos, etc.  Brainsights analyzed participants’ responses to all the content they saw. The findings revealed not only that many marketers were engaging in unconscious age bias, but also that Boomers were pushing back against offensive labels and aging stereotypes.

Research revealed 4 insights to help marketing resonate with Boomers:

•  Say goodbye to old age stereotypes. Today’s Boomers see themselves as being cheeky, mischievous, adventurous and capable. Old age stereotypes depicting 55+ Canadians as frail and fumbling will miss the mark. Continue Reading…