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.

What’s the difference between life annuities and tontines?

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Here’s my latest MoneySense blog, entitled The case for tontines: part 2. It follows Part 1, which ran a week ago both at MoneySense.ca and here at the Hub: Tontine: Retirement Plan of the Future? 

After the first piece ran and even after reading both of Milevsky’s two latest books from cover to cover — one is essentially about annuities, the other about tontines — I realized I was still hazy about the exact difference between life annuities and tontines. I figured that if I was a little uncertain, so would many readers be.

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Moshe Milevsky

Moshe responded with a quick clarification of the two major differences, as well as sending me a recent presentation he made that touched on both concepts. Whether all these concepts could be incorporated into the ongoing debate about an expanded and voluntary CPP remains to be seen, but see today’s other guest blog by Pierre Laporte, entitled Voluntary CPP is an old idea … has its time finally come?

Not anywhere near as old as tontines, mind you!

For archival and one-stop shopping purposes, we also show the blog below, with a few subheads and images added: Continue Reading…

Weekly Wrap: Voluntary CPP expansion, Social Security fixes, Longevity Insurance, Tontine Annuities

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View of Ottawa on the Grunge Canadian Flag

A lot of coverage this week for the Tories’ floating of a “voluntary” expansion of the Canada Pension Plan (CPP: Canada’s equivalent of Social Security, if you also include its Old Age Security program), especially when you consider the details were pretty scant.

Incidentally, the issue is quite similar with Social Security in the U.S. This week, Reuters ran a piece entitled How to use Social Security to fix Retirement Inequality. It makes the case for “expanding” Social Security benefits “to help people who need it most.”

The Hub ran two pieces on the proposed CPP expansion: an initial one that felt it looked promising, despite the lack of detail: Bring it on!, followed by a guest blog by Retirement Redux’s Sheryl Smolkin: Voluntary CPP contributions will favour high earners.

Time to bring back Tontine Annuities? Continue Reading…

The 6 stages of Financial Independence

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Sales funnel. Marketing or Business ChartBy Jonathan Chevreau

The Financial Independence Hub

I’ve been doing lots of reading lately about a new stage of life between MidLife and traditional Retirement. You can read the details in Marc Freedman’s The Big Shift, which confirmed what I’ve been slowly piecing together since my career change this time last year.

The  Financial Independence Hub organizes blogs in six categories that are quite similar to the Ages & Stages that MoneySense has long espoused, both in its articles and in its Special Interest Publication, Guide to Retiring Wealthy. You can find these six blog categories in the horizontal grey band that appears below the horizontal blue band at the top of the Hub’s home page.

Ages & Stages: The Life Cycle approach to Investing

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Re-introducing Tontine Annuities Might Shave Years Off Your Findependence Day

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Moshe Milevsky

By Moshe A. Milevsky

Special to the Financial Independence Hub

Here is a non-surprising fact. Most retired individuals do not choose to voluntarily annuitize their accumulated wealth or savings at retirement. They prefer the lump sum. This has been christened by financial economists: “the annuity puzzle” and has been the topic of Ph.D. theses for decades. I am guilty of supervising a few of these myself.

Sadly, life annuities are relatively unpopular – especially compared to stocks and bonds — in a large part of the world and simply unavailable in most others. Indeed, the few jurisdictions and countries in which there is a sizeable market for annuity products – such as Canada or the U.S. — it is often driven by tax-advantaged treatment and/or government “nudging and defaults” as opposed to an intrinsic consumer appreciation for longevity insurance. Like most insurance products, they are ‘sold’ but rarely purchased.

Could the past hold the key to Longevity Insurance?

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Tontine: Retirement Plan of the Future?

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tontinebookHere’s my latest MoneySense blog, entitled Tontine: Retirement Plan of the Future, which describes a new book by retirement guru Moshe Milevsky entitled King William’s Tontine. We will follow with a guest blog by Moshe himself on Thursday elaborating on his vision of tontine-like structures as a 21st century fix for declining Defined Benefit plan coverage and rising longevity expectations. In some respects, the Tontine — all but banished in many countries — resembles life annuities. Movie goers may recall a movie where the tontine prominently features: The Wrong Box.

Given this week’s press coverage of the voluntary expansion of the Canada Pension Plan (CPP), Milevsky’s book is all the more timely, since it ’s all about longevity insurance and true pensions: that is, life annuities and true Defined Benefit pensions. (NOT Defined Contribution plans, RRSPs, TFSAs, etc., which are really capital accumulation plans that have no implicit guarantee of an income for life, no matter how long you live to.).

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