Dead Horse Wisdom

The tribal wisdom of the the aboriginal people, passed on from generation to generation, says that; “When you discover that you are riding a dead horse, the best strategy is to dismount."

However, with governments,  when in contract negotiations with its unions more ADVANCED strategies are often employed, such as:

1. Buying a stronger (and more expensive) whip.

2. Changing riders.

3. Appointing a committee to study the horse.

4. Arranging two trips to other countries to see how other cultures ride dead horses.

5. Lowering the standards so that dead horses can be included.

6. Reclassifying the dead horse as living-impaired.

7. Hiring outside contractors to ride the dead horse.

8. Harnessing several dead horses together to increase efficiency.

9. Providing additional funding and/or training to increase dead horse's performance.

10. Doing a productivity study to see if lighter riders would improve the dead horse's performance.

11. Declaring that as the dead horse does not have to be fed, it is less costly, carries lower overhead and therefore contributes substantially more to the bottom line of the economy than do some live horses.

12. Rewriting the expected performance requirements for all horses.

And of course...

13. Promoting the dead horse to a new position or a new  Ministery

More thoughts on Women and retirement

For women the burden is greater but the outlook does not have to be bleak.

Savings tied to earnings – savings that come directly from a paycheck – are savings that are put away before daily and immediate financial demands. The increasing popularity of automatic features in employer plans –including automatic enrollment and contribution escalation – will also help jump start retirement investment and regular contribution increases.

These may not result in adequate savings rates, particularly for women, when they are based on a percentage of a lower salary. In addition, women need to accumulate more in terms of real dollars to accommodate longer expected life spans.

Access to education, planning and guidance services via the workplace can be especially powerful for women. These products and tools need to focus on the empowering steps women can take to achieve retirement independence. They must accommodate the many generational and cultural differences that make women more than a single niche market, as they have been historically considered by many marketing efforts.

We must also give special consideration to women on their own, divorced, widowed and single, who are at increased risk of underfunded retirement and have greater need for relevant, practical advice and tools to help them overcome the substantial obstacles they may face.

Many of the solutions and messages women need to better prepare for retirement exist today including: Lifecycle funds and managed accounts; varied and multi-media educational platforms, websites, tools and advocacy groups; automatic features in plans; financial advisors and planners; and proposed parameters for advice within Defined Contribution plans.

There’s not a single one of these developments that's intrinsically “feminine” or solely benefitting women as opposed to men. Retirement saving and preparation, for women, is not so much a question of what or how, but an issue of more, longer and better.

As consumers, women wield increasing and in many cases overwhelming economic power. All interested parties – employers, advisors, financial product manufacturers – need to help women begin to exercise the same power and control over their own financial futures.

Women and Retirement planning

The following information is taken from the following sources

Stephanie Penn, .Editor at DailyVenusDiva.com Retirement Realities for Women, Posted: 05/08/2012;

ING’s Retirement Revealed, On-line survey was conducted by ORC in October, 2011

The life expectancy of women exceeds that of men so imagine going from making $2000-plus per month to receiving a check on the second Wednesday of the month that resembles the cost of your mortgage? If they're lucky, they have a husband who is still living and receiving a check as well but what about the women trying to make it on their own?

That's a reality that many senior citizens face during retirement so when I read the following study I would be lying if I said that I was surprised.

On May 3rd, ING U.S. released findings from a study commissioned by the ING Retirement Research Institute that sheds light on the distinct realities women encounter when saving and preparing for retirement.

According to the study, among those who have savings in or outside of an employer-sponsored retirement plan, men have substantially more saved than women, a striking $149,000, on average, compared to women, who averaged $108,000 in total savings.

Could it be that women are not encouraged to save as frequently as men?

In many households, boys are told at a young age that they have to provide for their families. They're encouraged to get out and work and make enough money to take care of their families. It really doesn't matter what environment they're a product of, the message of 'survival of the fittest' is loud and clear.

But what about girls?

While times are changing and the age of women getting married increases every year, girls are still encouraged to be passive in certain areas of their life. This rings true for the workforce and in relationships. In a perfect world, there is room for two leaders but you and I both know that the world is not perfect so if a man is taught to lead, then women are taught to follow.

Although followers play an important role in every situation, they aren't the leader. By definition a follower subscribes to the teachings or methods of another. Followers don't think ahead, they seldom take initiative and they definitely don't plan for the future, i.e. retirement plans. In the study, men far outnumber women in terms of planning for retirement.

Let's look at some more statistics.

·         The majority (60 percent) of mothers do not feel prepared for retirement and almost half (46 percent) don't know how to achieve their retirement goals.

·         Less than three-in-ten (28 percent) have calculated how much they'll need to retire, compared to half (50 percent) of men.

·         Gen Y (age 25-34) women are most likely to have barriers to saving (86 percent) compared to women 35 or older (74 percent) and more than half of Gen Y women (56 percent) have outstanding student loans.

What does the “Mother”  profile look like?

•      She has a median age of 40.6

•      She’s likely married or living as married (80%)

•      63% have completed college or a higher level of education

•      She contributes 7.1% of pay to her employer’s retirement plan, has a plan balance of $46,000

•      She’s likely a moderate investor (55%)

•      85% have barriers to saving for retirement; insufficient income and debt are the most significant.

•      She’s especially vulnerable to life’s sudden and financially unpleasant surprises

•      She probably doesn’t have a will

•      Saving for college for her children is a significant long-term financial goal – #1 for 26%, but retirement is the #1 long-term goal for 46% of women raising children (it's the #1 goal for 61% of women without children at home)

•      She likely has life insurance (94%), but in terms of multiples of pay, her  coverage is roughly 25% less than that of a similarly-insured father

•      She’s not likely (only a third or 33%) to have calculated how much she’ll need to maintain her lifestyle in retirement

•      She likely doesn't have a formal plan to reach her retirement goals (21%)

•      She has higher expectations of her employer when it comes to financial education; 52% think their employers could to more

•      She feels unprepared for retirement (60%)

Changing the mindset of millions of women isn't something that can happen overnight but it can be done.

Take responsibility and take action

Women, however, are more likely to report that “not knowing what my options are” is a significant impediment to retirement saving.

In relative terms, at all ages, women have saved significantly less than men. Younger women have saved just two thirds of men at the same age, and women age 65-69, in those critical pre-retirement years, have still saved just 78% of men the same age

At the same time, women are less likely to agree that “It is more important to maintain a good lifestyle than to plan and save for retirement.” 18% of men but only 13% of women agree. Conversely, more than half of women (52%) and just 46% of men actively disagree with the statement. Younger women, not surprisingly, are more likely to feel that current lifestyle takes precedence over long-term retirement planning

Educate yourself. No one knows everything and that's okay but that's what google is for. If you google the term "Retirement," one of the first thing that comes up is a link for Retirement Planing: Retirement Planning Checklist

Pace yourself. Getting to a place of financial empowerment doesn't just happen, it takes time. Take baby steps before you run. We want immediate results and are prone to give up if we don't see the light fast enough. Good things come to those who wait and that includes a lucrative retirement savings account.

We are all grown so we know what we should and should not be doing. Sometimes we just need a friendly reminder, to get our finances in order

Retirement thoughts

In an earlier posts I have talked about the fact that many younger people (under 60:-) are not investing in programs that will provide for them when they retire. There are many reasons why people don't invest in pension planning, and I have talked about some of them in earlier posts.

One of the reasons is lack of understanding of how much one would need in retirement. This is probably because we find it hard to estimate our own mortality. If you have healthy genes you may live to be 100, if not your life span is shorter. I love reading articles about people who live long and healthy lives. The writers of these articles seem to think that it is healthy living and eating that causes longevity, I believe that is a small part of the equation, but the biggest part is your genes. So to figure out your longevity, look at your parents and grandparents, aunts and uncles to see how long they lived. Once you have done that you have a pretty good guess as to your own mortality.

Once you have that age, you can refer to the following chart: (Source: http://www.canadianbusiness.com/article/81114--how-much-do-you-need-to-retire-well

and do some math. If you have a pension plan, add that to the figure you arrive at, so you can have a better guess as to what you will need. (The figures are spending for a year).

The figure of 25 times the annual spending is based on the idea that you will live 25 years past age 65. If you believe that you will live longer add this time to the 25, if you think you will live less subtract that number from the 25. Do the math in line E above and once you arrive at the figure you need, then you can start planning to save. 

For example to save $500,000 when you are 30 means you have 35 years to save. If you put the money in your mattress you would need about 21,000 a year or $1200 a month. If you invested in a RRSP with a return of about 5% you would only need about $400 a month.