Canada and US approaches to Retirement, the same but different

Back in 2012, the Society of Actuaries (SOA) completed a survey that looked at how Canadians and Americans prepared for their retirement. It was an interesting report. Canadian and U.S. respondents were asked to indicate their level of concern about eight post-retirement risks. Ranking these risks by the percentage of respondents saying they were very or somewhat concerned about each, shows strong similarities between retired and pre-retired respondents and between Canadian and U.S. respondents.

Specifically, Canadian retired and pre-retired respondents are most likely to say they are very or somewhat concerned about maintaining a reasonable standard of living for the rest of their lives, followed by:

•    Having enough money to pay for adequate health care

•    Depleting all of their savings

•    Having enough money to pay for long-term care expenses

•    Maintaining the same standard of living for their spouse/partner, if the respondent should die first (among those married or living with a partner)

•    Their financial ability to stay in their current home for the rest of their lives

Canadian respondents are less likely to identify two risks as very or somewhat important:

•    Leaving money to children or other heirs

•    Relying on children or other family members to provide assistance

In the United States, retired and pre-retired respondents are most likely to express high levels of concern about having enough money to pay for adequate health care, but their next four concerns are similar to Canadians:

•    Depleting all of their savings

•    Having enough money to pay for long-term care expenses

•    Maintaining a reasonable standard of living for the rest of their lives

•    Maintaining the same standard of living for their spouse/partner, if the respondent should die first (among those married or living with a partner)

U.S. respondents are less likely to identify three risks as very or somewhat important:

•    Their financial ability to stay in their current home for the rest of their lives

•    Leaving money to children or other heirs

•    Relying on children or other family members to provide assistance

Although the health care and long-term care systems in Canada are very different from those in the U.S., with the Canadian system generally being considered more supportive of those in need, it is somewhat surprising to note that Canadian retirees had more concerns than U.S. retirees.

The Canadian pre-retirees’ higher concern about maintaining a reasonable standard of living after retirement may be due to the lower level of social security benefits in Canada for workers above the average wage. Although the Canadian social security system is financed on a basis that is more sustainable in the long term than U.S. social security, many of the U.S. respondents may not be aware of the significant financial challenges to U.S. social security in the long term.

We here in Canada have many of the same concerns as our American neighbours, with health care being among the top concerns.

Old School A clearinghouse for all things anti-ageism

You may have seen an ad circulating on YouTube and Facebook that suggests that Boomers don’t want young people to vote. This ad is ageist and appalling on so many levels it is hard to take count. First, older adults have children and grandchildren they love and have a stake in their future.

This divisive ad series for Hulu, Facebook, Instagram and Snapchat feed into a disturbing narrative too,  unbelievably, disenfranchise older people by removing their right to vote at say, 70. According to an article in Time Magazine, The over-65 generation does not accurately represent our country, because they are overwhelmingly white and actually vote. So, unfortunately, we're going to have to bar them from voting.

In another article in the Canadian Magazine McLeans One proposal (large pdf file) mooted in philosophy circles over the past few decades is to disenfranchise the elderly—that is, eliminate the right to vote at age 70 or some other appropriate upper threshold. The idea is that once citizens reach a certain age, they will be less concerned with our social, political, and economic future than younger generations and much less likely to bear the long-term consequences of political decisions and policies. In that case, their votes ought to be discounted, or eliminated altogether, to ensure that the future is shaped by those who have a real stake in how it turns out. But would disenfranchising older citizens be fair?

This sort of campaign is, sadly, just the most recent example of ageism creeping into every aspect of modern life. Luckily, there’s some help online to combat it. Oldschool.info, the brainchild of anti-ageism activist and author Ashton Applewhite, is a new online clearinghouse of free and carefully vetted resources (like Senior Planet) to educate people about ageism and help dismantle it. The Oldschool.info website says it is a clearinghouse of free and carefully vetted resources to educate people about ageism and help dismantle it. You’ll find blogs, books, articles, videos, speakers, and other tools (workshops, handouts, curricula etc.) that are accessible to the general public. Our goal is to help catalyze a movement to make ageism (discrimination on the basis of age) as unacceptable as any other kind of prejudice. Old School is the brainchild of anti-ageism activist  Ashton Applewhite of This Chair Rocks, and it is an ongoing, interdisciplinary collaboration. If you have an ageism-related resource to contribute to OldSchool not about positive ageing or productive ageing or healthy ageing or conscious ageing or creative ageing, but explicitly focused on ageism please visit the webpage and share it.

Work as play, play as work

Once I found my dream job, I never worked a day after that. Many of you feel the same way but some of you are stuck in jobs that are less than your dream job. 

So, here is something to think about, the trick to blending work and play lies not in what you do, but in how you view what you do.

See work as play and see play as important - super, easy and very important to your mental and emotional health.

Women in retirement

Here are some sobering statistics about women and why they need to start saving for their own retirement so starts the article by a writer for Liberty Financial Services. Yes, the stats quoted are scary, as is the rest of the article.

·       Two of every five marriages end in divorce before the 10th anniversary;

·       The mean age of a divorced woman is 44;

·       Women outlive men by 4.4 years;

·       Women earn 27% less than men as a result of the gender pay gap; at more senior levels, women earn 39% less;

·       One in every two families is headed by a single mother, and only 16% receive financial support from the father;

·       Working women are more likely to be caught in the sandwich generation – looking after their children as well as their parents.

The writer goes on to say that women are living longer than men, earning less, spending more on care both for children and parents. This means that women are poorly prepared for the retirement years.  When women are ready for retirement, the lack of savings puts women into the situation where they have to work past retirement age. 

So more women today are getting divorced and may have access to their ex-husband's pension when they are ready to retire. This is what happened to my brother-in-law and his ex-wife. She had never worked and did not have any savings, so when they divorced, she opted to collect her share of his pension. My brother-in-law actually worked past retirement to make sure she could not collect on his pension early. In the end, it has worked out for both of them. She started a career but will have to work until she is 65 and he retired and is able to live off his portion of his pension.

Women need to look at any pension funds or plans their husband is contributing to or has as an asset if they are getting a divorce. The reality is that they may have access to a portion of their ex-husband’s retirement fund when they divorce. If so, invest the funds in their own retirement or opt to be paid a portion of the pension when retired. Either way, make sure your lawyer ensures this is part of your settlement.

From a legal point of view, the most common type of marriage contracts is the in or out of community of property with accrual, meaning the wealth accrued from the date of marriage is shared equally on divorce. This allows the divorced woman to share equally in the wealth accrued during the marriage.

The author then goes on to say that women who are not saving 15% of their net income (after taxes and expenses) are living beyond their means. I think she is saying this to motivate women to save, but I am at a loss of how shaming people helps to motivate them. 
At the workshops, I give on health and wellness the majority of my audience, over 90% are retired women and I talk to them before and after the presentations. They appear to be living full, active and happy, productive lives, some live in retirement centers, the majority live at home, some live in women's co-op housing. The idea of ‘retirement savings’ is often looked upon with dread by women, since it conjures images of old age and decrepitude. This was the case in the late 20th century but for most people, this is no longer true, as many areas have safety nets to help.

However, many women are not making a good salary, they are making minimum wage or just beyond and they are struggling to pay rent, feed their families and survive, with no help from their ex-husbands. So, if you have no savings at all and nothing left at the end of the month to save what should you do?

The advice in the article is to stop living beyond your means and take on more work, which is not helpful. For many of us, the idea of saving for retirement in our 30’s 40’s and early 50’s is a dream. Life is expensive if you are making the average wage or below the average wage.  

In Canada and in the USA, there is government help, both at the Provincial and the Federal level when you turn 65 and have not saved enough. In Canada everyone at the age of 65 can claim the Old Age Security and if needed the Guaranteed Income Supplement. In the USA there is the Social Security benefit which is dependent on your age, but the maximum amount if you retire at age 65 is currently $31,068 a year. 

Not everyone is entitled or will collect the maximum in either country. So as women start to think about retirement, they need to know that there is some government assistance. This does not mean they should not save, but they could set a savings goal that is more realistic than 15% of net salary. Perhaps start by savings between 2 and 5% of gross income. Once the saving habit is established, then moving toward a higher goal and living with a culture of savings becomes easier. There are lots of products available to assist in developing the culture of saving.