Retirement Readiness 1

The Aegon Center for Longevity and Retirement completed its seventh Annual Aegon Retirement Readiness Survey, The New Social Contract: a blueprint for retirement in the 21st century This report examines retirement insecurities at a time in history in which megatrends are changing how people live, work, age, and retire.

The idea of a ‘social contract’ has been central to retirement systems in many countries around the world and has been since Germany became the first nation in the world to adopt an old-age social insurance program in 1889.

A social contract is an arrangement involving three pillars (or three-legged stool) including governments, employers, and individuals – each with a specific set of expectations and responsibilities. When established these social contracts emphasized government and employer retirement-related benefits and, to a lesser extent, the need for personal savings.

When these retirement systems were created, life expectancies were typically 65 years for most workers, which also happened to be the age of entitlement. Since then, the age of entitlement has remained largely unchanged, but life expectancies have increased significantly in most countries.

Today, due to increases in longevity and population aging, government-sponsored retirement benefits are under severe financial strain. Traditional defined benefit pension plans offered by employers are disappearing and being replaced by employee-funded defined contribution retirement plans.

With these shifts, individuals are expected to take on increasing risk and responsibility for self-funding a greater portion of their retirement. However, many are inadequately equipped to successfully to do so, and many are therefore at risk of not achieving a financially secure retirement.

This report examines the global megatrends shaping retirement and finds:

·       Increases in longevity and population, ageing are megatrends that are placing a growing financial strain on social security safety nets as well as workplace benefits such as defined benefit retirement plans.

·       Technology is changing the way people live and work. Flexible labour markets no longer mean a job-for-life. All of these changes and others impact retirement, which is recognized by some but not all of today’s workers:

·       Globally, the most frequently cited megatrend impacting people’s plans for retirement is the reduction in government benefits (38 percent). The second most frequently cited is increased life expectancy (27 percent), followed by volatility in financial markets (24 percent).

·       Of concern to the researchers is that relatively few survey respondents acknowledge any megatrends as impacting their retirement planning, especially megatrends relating to employment trends, technology and the financial markets

Did you play 36 holes of golf today?

Thanks to George for this old gem. 

It will be a few more months until the golf season is here, but this brings back some memories and hopefully will bring you a smile.

Wife

--"Where the hell have you been? You said you'd be done with golf by noon."

Husband

--"I'm so sorry Honey....but you probably don't want to hear the reason."

Wife --"I want the truth and I want it NOW!"

Husband --"Fine. We finished in under 4 hours; a quick beer in the Clubhouse. I hopped into the car and would have been here by 12 noon but on the way home, I spotted a girl half our age struggling with a flat tire.

I changed it in a jiffy, and next, she's offering me money. Of course, I refuse it, then she tells me she was headed to the bar at the Sheraton and begs me to stop by so she can buy me a beer. She's such a sweetie, I said yes.

Before you know it, one beer turned into three or four, and I guess we were looking pretty good to each other.

Then she tells me she has a room right there at the Sheraton, less than 50 steps from our table. She suggested we get some privacy while pulling me by the hand.

Now I'm in her room...clothes are flying...the talking stopped and we proceeded to have sex in every way imaginable. It must have gone on for hours because before I know it, the clock says 5:30. I jump up, throw my clothes on, run to the car, and here I am. There. You wanted the truth... You got it.

Wife --"Bullshit! You played 36 holes, didn't you?"

Dementia diagnoses what next?

A friend of mine has been diagnosed with dementia. So, I started looking for what to expect as he progresses through the disease and found these guidelines expert Dr. Heather Palmer, National Director of Cognitive Well-Being for Amica. They are general in scope but gives an idea of what to look for and expect.

Safety

“I’d be evaluating if the parent is able to go about daily life in their environment in a way that’s not going to cause any harm or injury,” says Dr. Palmer. Can your mom manage the stove? If not, what safety precautions can be put in place to enable her to use the kitchen, but not be in danger? “Safety factors should be considered in every room,” says Dr. Palmer.

Wandering

Is your parent going out at 3 a.m.? It is common for people with dementia to confuse day and night and to wander or try to leave their environment. “When a person is feeling anxious because he believes he is late for work, you should know how to offer support by safely redirecting and reassuring him,” says Dr. Palmer.

Eating

Is your parent getting proper nutrition?

“Eating habits in someone with dementia can change quickly,” says Dr. Palmer. They may forget to eat, have changing taste preferences or not feel hunger. Others may require ongoing prompting because of confusion around how to use utensils.

Socializing

Research consistently points to the importance of social interaction to help slow cognitive decline. How are social opportunities being maintained for your loved one: Is someone visiting every day? Is the person seeing friends or staying home with very little interaction?

Hygiene

Is your loved one able to brush their teeth, comb their hair or bathe? If they’re living with a spouse, is the spouse able to help?

Do we pay more in taxes in Canada then we should?

As the year moves toward the end, and before we get into a frenzy about Christmas shopping many of us will be thinking about our Tax situation. The Canadian news media is always awash with coverage of studies purporting to show the growing burden of taxation, reinforcing a narrative that Canadians are paying high tax rates and providing, they hope, a justification for tax cuts. A study (THE BRASS TAX Busting myths about overtaxed Canadians) by done the Broadbent Institute investigates whether these claims and the popular anti-tax narrative they help underpin, hold up to statistical scrutiny. The bottom line is they don’t. The following is from the Executive study of this report.

The Brass Tax looked at key publications on taxation covered extensively by Canadian news media every year: The Fraser Institute’s annual Tax Freedom Day. That report claims “average” Canadian families pay a tax rate of over 40%. The Brass Tax study also looked at the trend highlighted by the Macdonald-Laurier Institute (MLI) showing that most affluent Canadians are paying a larger share of income taxes than they were in the past.

Employing more accurate statistical methods, the Brass Tax found compelling evidence that the Fraser Institute and MLI findings are problematic and do not provide an accurate depiction of typical Canadian tax rates.

The study’s key findings of the Brass Tax Study are:

•      The effective tax rate including income, payroll, and commodity taxes for the typical Canadian family is 24%, a little over half of the 40% plus claimed by the Fraser Institute.

•      The typical effective tax rate for a Canadian family, for income tax only, is 11%.

•      The typical working Canadian individual aged 25 to 54 pays a rate of approximately 14% in income taxes.

•      Only 20% of working Canadians pay more than 20% of their income as income taxes.

•      The typical income tax rate for Canadians in the middle of the income distribution is 10% to 19%. Only 2% of working Canadians pay more than 30%.

•      For Canadians that earn more than $250,000, their average income tax rate was 29%.

•      The share of income tax paid by the top 1%, has increased from 12% to 20% over the last 32 years.

§  This is due to their share of all income increasing from 7% to 10% — a 45%jump.

•      Their income tax rate has, in fact, been falling since2000.

Finally, this study finds that Canada’s tax revenue relative to GDP is trending downward and is substantially lower than that of most OECD countries — Canada ranks 25th of 35 member countries.

Much of the media coverage of taxation gives Canadians the impression that they are paying far more in taxes then the really do.

Taken together, this study’s findings undermine the narrative of an undue and growing tax burden for typical Canadians and provide a cautionary tale for news media that cover these misleading tax studies and their calls for further tax cuts.