Wednesday, May 3, 2017

Can we afford to stay at home when retired?

A growing trend among retirees is the desire to remain in one's home as long as possible. In fact, a recent study quoted by AARP shows 87% of those 65+ want to age in place for as long as it is safe. Even among those 10 years younger, 71% would opt to stay put. Familiarity and community ties are the biggest draws.

In BC 93% of seniors live independently, with 80% owning their own homes and 20% renting. The three biggest challenges to senior homeowners are
  • Taxes and utilities increasing faster than inflation
  • Maintenance costs
  • Major repairs may force a move
  • Home equity becomes difficult to assess.

The biggest challenges to senior rentals are
  • Affordability
  • Availability
  • Appropriateness

 The following chart from the office of the Senior Advocate of BC shows how in BC senior renters and homeowners are in trouble:
Homeowners and renters Living expenses 2016
Metro Vancouver
Home Owner
Renter
After Tax Income
1902
1902
Total Homeowner Expense
966

Basic Cost of Living
1064

Remaining Funds
-371

Average Rent 1 Bedroom

1079
Basic Living Costs

1008
Safer Subsidy*

108
Remaining Funds

-81
*Shelter Aid for Elderly Renters


So We want people to age in place, but we make it almost economically impossible to do this, so we have to advocate the government to give more consideration to this particular aspect of ageing. The research shows that if more seniors end up in homes than the health care costs will go very much higher. This issue is not just an issue for us in BC, but it is an issue in almost every jurisdiction. Allowing seniors to age in place reduces the cost to society, and makes ageing a more pleasant experience. 

Tuesday, May 2, 2017

Income Insights: Gender Retirement Gap

Some excerpts from the “Income Insights: Gender Retirement Gap” a report by Teachers Insurance and Annuity Association of America-College Retirement Equities Fund October 2016

A cursory view of the US retirement system may appear to be gender neutral; however, after carefully reviewing the data, the Gender Retirement Gap and the significant barriers women face is clear.  In order for the two recent college graduates to have the same amount of money saved for retirement, the man would need to save 10% of his salary while the woman would need to save 18%. Generally speaking, women work for fewer years and receive fewer salary increases among other issues.

Throughout their careers, when both men and women are supposed to be saving for retirement, women face greater challenges than men.
1. Women work fewer years over the course of their lives.
2. When they do work, women earn less compensation than men.
3. Women take on less investment risk, which results in lower investment returns.

Many retirement strategies assume workers will be in the workforce for 40 years. The data demonstrates that neither men nor women tend to work that many years. Frequently, women take time off to have children and then do so again later in life to care to for elder parents. These career breaks add up, resulting in women spending significantly fewer years in the workforce.

As the table below highlights, while men work an average of 38 years, women only average 29 years. This nine-year shortfall means that women work 75% of the years that men work. This fact alone makes it immediately obvious that women need to save a higher percentage of their salary while they are working.


The past decade has marked an important shift in American culture. The number of women opting to leave the workforce to care for their children is on the rise. According to the Pew Research Center, at the turn of the century there were 23% stay-at-home mothers (SAHM).

Today the number is nearly 30%. The largest share of SAHM are married women with working husbands. This may seem surprising given the increase in educational achievement over that period. In 1970 only 7% of SAHM were college graduates, compared to 25% today.

According to the US Census Bureau, in the general population women still only earn 78 cents on the dollar relative to men. Women classified as professionals are even worse off. Professional women earned $996 per week in 2015, compared to professional men who earned $1,383, or, stated another way, 72 cents on the dollar.

Women can be much more risk averse than men and therefore invest somewhat differently. They trade and rebalance their portfolios less often, seek to protect the assets they have, and are much less likely to endure risk in hopes of generating higher returns. One of the keys to long-term investment success is the ability to take well-chosen risks, notably equity risk, the principal source of long-term investment returns. In this regard, women are not particularly effective investors.

Unlike other expenses throughout the course of their lives, the hurdles women face in retirement are not easily managed. Financing retirement needs is distinctly different for women
1. Women live longer.
2. Women spend more money on healthcare.

Examining the Social Security data closely, we discover that after a couple reaches the age of 65 about 1/³ of the men will outlive their wives whereas ²/³ of the women will outlive their husbands. The surprise in the findings is that after losing a spouse the surviving spouse will live another decade.



It is easy to think that the only reason women spend more money on healthcare is because they live longer. The data suggests there is more to the story. According to the Department of Health and Human Services from the age of 65 forward men will spend $18,251 on healthcare whereas women will spend $19,558. This 7% additional spending on healthcare can be attributed to women being more likely to have periods where they suffer through a chronic illness and, as the previous section highlights, they are much less likely to benefit from a spouse-caretaker. They also forecast that healthcare expenses will rise at a rate of 5.8% per year between 2015 and 2025, a growth rate that will impact the financial security of many women.

The economics of retirement for women is starkly different than for men. Women work fewer years, at lower levels of compensation and earn lower returns with their savings. These factors combine to create a resource constraint for women in their golden years. In spite of the fact that women will have fewer economic resources at their disposal, they will incur higher expenses during the retirement phase of their lives, the most prominent one being healthcare.

Despite these odds, countless women successfully prepare for retirement and earn financial security. There are many possible strategies that could lead every woman down the path to success. Below are three noteworthy solutions that are easy to implement. Simple solutions include:
A.  Supplemental savings; even beyond tax deferred amounts
Many women hesitate to save more than the “maximum” amount the government allows taxpayers to put aside for retirement. Trusted advisors might very well encourage women to save more than the maximum. Given lengthening longevity and our increasing desire to have quality time in retirement, putting aside supplemental savings will almost always benefit women in the long run.

B.   Higher levels of risk with savings; marginal equity exposure
Women should consider allocating some portion to higher risk savings. By taking more risk and investing in higher returning assets such as: large cap stocks, international stocks, and real estate, women have the potential to improve the performance of their investment portfolios, resulting in higher levels of lifetime income.
C.   Higher level of guaranteed lifetime income
Many financial advisors suggest obtaining guaranteed lifetime income to cover essential expenses in retirement. These principally include; healthcare, housing, clothing, food and shelter. Just as relying on the average number of years worked can be misleading for women, relying on the average expenses in retirement does not account for the additional economic burden women bear in retirement. Women will both live longer and have higher expenses in retirement.
Women should consider opting for a higher level of guaranteed income recognising that their healthcare expenses are 11% higher and that they are likely to be the sole providers of their household for over a decade. Whenever possible, women should strive to obtain guaranteed lifetime income through their company’s retirement plan.
Even though women have longer life expectancies, the Supreme Court held that when companies offer lifetime income through their retirement plans they must use unisex life expectancy tables. The net result is that men and women of the same age with the same savings will receive the same dollar amount each month by opting into a lifetime income plan offered through their company.

All women, especially those with fewer resources at their disposal, should take advantage of the unisex actuarial tables available through their companies and protect themselves from outliving their assets. Women who decide they want lifetime income outside of their company’s retirement plan will quickly discover that without the benefit of the Supreme Court decision, they will receive a smaller monthly paycheck. This marks a unique opportunity for women to experience an economic advantage in the workplace based on gender. 

Monday, May 1, 2017

What can you do to celebrate Canada's 150th Birthday?

Community-driven projects form the basis for the celebrations of Canada’s 150th anniversary of Confederation.
Communities all across the country will have the chance to highlight regional talent and expertise, as well as the various facets of Canada’s diversity. Projects will include festivals, youth exchanges and forums, cultural projects and works of art.
Join the celebration, it’s happening in your community too! 
Here is a Webpage with community celebrations from each province: http://canada.pch.gc.ca/eng/1475775848282
Pan-Canadian Signature projects are large-scale, participation-oriented activities, of national scope and with high impact. These projects will bring Canadians together to celebrate, participate in events and share experiences. 
Here is a page with a link to these projects
Here are a few projects that I found interesting:
Through Creative Interventions, the 150 Years Young campaign will acknowledge and highlight millennials’ diverse contributions and mobilize their potential. Photos and Stories will be collected to illustrate how millennials make a difference then will be posted online and projected on buildings in 5 different cities as part of Street Talks events.
The “Edges of Canada sesquicentennial tour” represents the most ambitious undertaking in National Youth Orchestra’s 57-year history. Travelling to top venues in 12 cities coast-to-coast-to-coast, the Orchestra will perform, some of the most complex and beautiful classical music repertoire to be heard anywhere in Canada, if not the world. This year, they will add not only a massive expansion in reach but also a massive expansion in the extent of their collaborations and artistic scope.
The special sesquicentennial tour will also see the Orchestra perform specially commissioned new works by Canadian composers, a collaboration in selected cities with the National Youth Choir, and also the performance of a very special original multi-arts component, which will be created by leading Indigenous artists from every part of Canada
Five of Canada’s leading science organisations have combined forces to create Innovation150, a nationwide program designed to celebrate our country’s innovative past, present and future, igniting the spark for future discoveries in science, technology, engineering and mathematics (STEM), and paving the way for the innovators of tomorrow.
Innovation150 is a year-long program featuring a national science tour, a hands-on make space, innovation festivals, a quantum exhibition, educational materials for kids, and a collaborative digital innovation storybook.

The Lost Stories Project seeks out little-known stories about the Canadian past from across the country which will be brought to light and transformed into public works of art. This process is documented through a series of short films. Watch as we embark on a creative journey into our history.
How can I get involved?
Are there little-known stories that you think are worth telling, and that are connected to a particular location where a marker could be constructed? If so, write: historylost@concordia.ca or share through Facebook or Twitter.

The Red Couch Tour is calling all Canadians to have a seat and share their story! To celebrate Canada’s 150th Anniversary, the Red Couch is travelling cross-country to hear from Canadians on what Canada means to them.
The Northern tour kicked-off of on March 1st in Iqaluit, and continues for an 8-week national tour in June and July from Newfoundland and Labrador to British Columbia, with many stops along the way including small towns and major urban centers. Follow the journey online and watch for a tour stop in your community!

Social Isolation of Seniors Part 2

Social isolation is: “less social contact than someone wishes, causing loneliness or other emotional distress” In “normal” ageing, a senior’s social circle may grow smaller due to:
         Illness or disability
         Loss of spouse or friends – more than 6% of Canadians over the age of 65 reported not having any friends
         Caregiver responsibilities
         Poverty
         Lack of personal hygiene

However, senior isolation is serious. 
1.     Senior isolation increases the risk of mortality. According to a 2012 study in the Proceedings of the National Academy of Sciences, both social isolation and loneliness are associated with a higher risk of mortality in adults aged 52 and older.
2.     Feelings of loneliness can negatively affect both physical and mental health. Regardless of the facts of a person’s isolation, seniors who feel lonely and isolated are more likely to report also having poor physical and/or mental health, as reported in a 2009 study using data from the National Social Life.
3.     Perceived loneliness contributes to cognitive decline and risk of dementia. We evolved to be a social species it’s hard-wired into our brains, and when we don’t meet that need, it can have physical and neurological effects.
4.     Social isolation makes seniors more vulnerable to elder abuse.  Many studies show a connection between social isolation and higher rates of elder abuse, reports the National Center on Elder Abuse. Whether this is because isolated adults are more likely to fall victim to abuse, or a result of abusers attempting to isolate the elders from others to minimise the risk of discovery, researchers aren’t certain.
5.     LGBT seniors are much more likely to be socially isolated. LGBT seniors are twice as likely to live alone, according to SAGE (Services & Advocacy for GLBT Elders); they are more likely to be single and they are less likely to have children and they are more likely to be estranged from their biological families.
6.     Social isolation in seniors is linked to long-term illness. In the PNAS study mentioned above, illnesses and conditions such as chronic lung disease, arthritis, impaired mobility, and depression were associated with social isolation.
7.     Loneliness in seniors is a major risk factor for depression. Numerous studies over the past decade have shown that feeling loneliness is associated with more depressive symptoms in both middle-aged and older adults
8.     Loneliness causes high blood pressure. A 2010 study in Psychology and Aging indicated a direct relationship between loneliness in older adults and increases in systolic blood pressure over a 4-year period. These increases were independent of race, ethnicity, gender, and other possible contributing factors.
9.     Socially isolated seniors are more pessimistic about the future. According to the National Council on Aging, socially isolated seniors are more likely to predict their quality of life will get worse over the next 5-10 years, are more concerned about needing help from community programs as they get older, and are more likely to express concerns about ageing in place.
10. Physical and geographic isolation often leads to social isolation. “One in six seniors living alone in the United States faces physical, cultural, and/or geographical barriers that isolate them from their peers and communities,” reports the National Council on Aging. “This isolation can prevent them from receiving benefits and services that can improve their economic security and their ability to live healthy, independent lives.”
11. Isolated seniors are more likely to need long-term care. Loneliness and social isolation are major predictors of seniors utilizing home care, as well as entering nursing homes, according to a 2004 report from the Children’s, Women’s and Seniors Health Branch, British Columbia Ministry of Health.
12. Loss of a spouse is a major risk factor for loneliness and isolation. Losing a spouse, an event which becomes more common as people enter older age, has been shown by numerous studies to increase seniors’ vulnerability to emotional and social isolation, says the same report from the British Columbia Ministry of Health. Besides the loneliness brought on by bereavement, the loss of a partner may also mean the loss of social interactions that were facilitated by being part of a couple.
13. Transportation challenges can lead to social isolation. According to the AARP, “life expectancy exceeds safe driving expectancy after age 70 by about six years for men and 10 years for women.” Yet, 41% of seniors do not feel that the transportation support in their community is adequate, says the NCOA.
14. Caregivers of the elderly are also at risk for social isolation. Being a family caregiver is an enormous responsibility, whether you are caring for a parent, spouse, or another relative. When that person has Alzheimer’s disease, dementia, or a physical impairment, the caregiver may feel even less able to set aside his or her caregiving duties to attend to social relationships they previously enjoyed. This can trigger loneliness and depression.
15. Loneliness can be contagious. Studies have found that loneliness has a tendency to spread from person to person, due to negative social interactions and other factors. In other words, when one person is lonely, that loneliness is more likely to spread to friends or contacts of the lonely individual. Making things even worse, people have a tendency to further isolate people who are lonely.
16. Lonely people are more likely to engage in unhealthy behaviour. A 2011 study using data from the English Longitudinal Study of Ageing (ELSA) found that people who are socially isolated or lonely are also more likely to report risky health behaviours such as poor diet, lack of physical activity, and smoking.
17. Volunteering can reduce social isolation and loneliness in seniors. We all know that volunteering is a rewarding activity, and seniors have a unique skill set and oodles of life experience to contribute to their communities. It can also boost longevity and contribute to mental health and wellbeing, and it ensures that seniors have a source of social connection.
18. Feeling isolated? Take a class. A review of studies looking at various types of interventions on senior loneliness found that the most effective programs for combating isolation had an educational or training component: for instance, classes on health-related topics, computer training, or exercise classes.
19. Technology can help senior isolation – but not always. Even though modern technology provides us with more opportunities than ever for keeping in touch, sometimes the result is that we feel lonelier than ever. The key to finding technological interventions that really do help, says Health Quality Ontario, is matching those interventions to the specific needs of individual seniors.
20. Physical activity reduces senior isolation. Group exercise programs, it turns out, are a wonderfully effective way to reduce isolation and loneliness in seniors and of course, they have the added benefit of being great for physical and mental health. In one study, discussed by Health Quality Ontario, seniors reported greater well-being regardless of whether the activity was aerobic or lower impact, like stretching.
 

Senior isolation is neither inevitable nor irreversible. Getting the facts can help us prevent loneliness in our senior loved ones as they face the life changes of ageing.