Retirement Readiness 3

Saving, investing, and planning for retirement can be an exercise in futility if an individual lacks the know-how that is required to be successful. While many people may not have the desire or wherewithal to become retirement experts themselves, they must be able to recognize and rely on sound advice.

Key to having a meaningful discussion with an advisor and having the confidence to make an informed decision is a baseline level of financial literacy, which unfortunately is lacking among people preparing for retirement.

Only 30 percent were able to answer correctly the ‘Big Three’ financial literacy questions developed by Drs. Annamaria Lusardi and Olivia S. Mitchell, which are designed to test an understanding of compound interest, the impact of inflation, and risk diversification. The ‘Big Three’ financial literacy

Health has emerged as the new frontier in retirement security. The miracles of modern science and improvements in nutrition in recent decades have made longer life expectancy the norm rather than the exception.

Inspiring people to make the link between health, wealth and well-being as they age is critical to ensure future retirement preparedness. While most people consider themselves to be in ‘good’ or ‘excellent’ health today, that is unlikely to remain the case for the rest of their lives because many are failing to take the necessary steps to maintain good health.

There is a clear correlation between workers who take steps to maintain good health and a person’s sense of retirement readiness. Workers who engage in all five of the five healthy behaviors identified in the survey achieve an ARRI score of 7.4 – a medium score – compared to those who engaged in none of the behaviors scoring 4.6 – a low score.

One of the key findings of this year’s survey is the widespread desire to remain in and enjoy one’s own home in retirement. Making this possible could involve relatively minor home modifications to help people live independently.

Seventy percent of respondents say that remaining in their own home is either ‘extremely’ or ‘very’ important to them as they grow older.

Globally, the most commonly cited feature or device is bathroom modifications (43 percent) followed by home security systems (39 percent) and age-friendly furniture and panic buttons to call emergency services (both 37 percent).

Do you shop online?

I am a big believer in the idea that we should support our local businesses as they provide jobs, and support for our community.  The problem that the small business has is how to compete against the online giants. However, like many seniors, I am on a fixed income and have to watch my budget and so I am not going to overspend. 

The other day I had a small problem with my car, the window on the driver's side would not open or close. If the problem was with the window on the passenger's side I would not have been too upset. 

It was the middle of summer and even though I have air conditioning I don't like to use it so I prefer to drive with my window open. Well with this problem I could not, in addition, going through a drive-through or having to ask for directions or go to the bank using the car for these purposes was not possible. I was surprised at the number of times I wanted to do something but because my driver's window would not open I could not.

I am not a mechanic, but I do have some aptitude on how to fix things if they are not too complicated. So, I went to Youtube and searched for the year and model of my car with my problem. I love that people have the time and energy and skill to fix a problem and to video their solutions. Over 500 videos came up with solutions to my problem. I took a look at about 6 of them and found one that was easy to understand and the video was easy to follow. All I had to do was get the part and replace it. 

The idea of supporting local business now comes into play. I looked up the part I needed on Amazon and it showed a price of $30.00 US plus delivery, taxes and duties so the final price was $48.00 US. 
I did the exchange and the price point for me in Canadian dollars worked out to be about $85.00 all in.

I went to my local auto parts store and asked if they had the part, they said they would have to backorder and it would cost $280.00 plus tax, I was expecting to pay between $85 and $100.00 so I was a bit surprised. 

I said to the auto parts person," I guess I will have to go to the dealership to get the part."

 He said, "I call the dealerships stealerships because they charge so much."

I went to the dealership and they did not have the part but could also order it for me and I was told the part would cost $278.00 plus tax. I thought I would try one more auto parts store which had been competitive in the past, but when I went there, they said the price would be $376.00 plus tax and they would have to backorder. At each of the places, the backorder would take at least a week to get to me.

I went home and ordered the part from Amazon and it took two days to arrive and I put it in following the video instructions in about 15 minutes. Later the same week, my son needed a light bulb for his car and went to a local auto parts store and it cost him $110.00 for one light. Amazon sells the exact same bulb for $22.00 Canadain for two lights. I am willing to buy local when the prices are not too far out of line with online prices and that is one dilemma that many of us who are on fixed incomes are faced with, do we pay extremely high prices to support local businesses or do we stay within our own budget even it if means shopping online.

Birthday recognition

I am taking a break from the posts on retirement today because this is a special day for a very special person. I want to take the time to wish my love a wonderfull happy birthday. 

Life is short and time passes so quickly but when you came into my life, it changed for the better. I am a more understanding, more patient, and a kinder person because of your influence. You mean everything to me.  Enjoy your day and remember that I love you.
Happy Birthday

Retirement Readiness 2

Today’s generation of workers is losing faith in the current system’s ability to provide retirement income security. Globally, almost half the survey’s respondents (49 percent) believe that future generations of retirees will be worse off than those currently in retirement.

The survey’s findings further illustrate:

1.   With the cost of Social Security becoming a greater concern as people live longer, only seven percent of people globally feel that the government should do nothing because social security provisions will remain perfectly affordable in the future.

2.   Employer-sponsored retirement benefits are vital in helping people financially prepare for retirement. However, only 43 percent of workers say their employer offers a retirement plan that includes an employer contribution and just 27 percent have access to a retirement plan without an employer contribution.

Although the social contract may be in jeopardy, people have a positive mindset about retirement. For many, retirement has become an active stage of life in which people aspire to stay socially connected, participate in their communities and remain economically active. Fifty-seven percent of workers envision some form of transition to retirement in which they continue working as they currently are or work part-time for a while or during their retirement.

Most are planning to do so because they both want and/or need to work. Earning an income later in life provides workers with the opportunity to continue saving and delay drawing down their retirement benefits and savings.

Based on the survey’s findings, many face a financially vulnerable retirement:

1.   Globally, workers expect they will need 68 percent of their current annual income in retirement.

1.   Alarmingly, only a quarter (25 percent) think they will achieve this retirement income and a further 13 percent feel they will achieve around 75 percent of their required income.

2.   Only 13 percent of workers have a written retirement plan while 44 percent say they have a plan, but that it is not written down.

1.   Only 32 percent of workers have a backup plan if they are unable to continue working before their planned retirement age.

3.   Many people are failing to diversify their retirement investments. When asked what financial means, if any, they are currently using or have used to prepare for retirement, people most frequently cite

1.   social security/state provision (46 percent),

2.   savings accounts/money market funds/certificates of deposit (CDs) (38 percent),

3.   a private pension/individual retirement accounts (IRA) (29 percent),

4.   life insurance (24 percent),

5.   investments such as stocks, bonds, mutual funds, etc. (23 percent).

Only 19 percent cite a company-funded defined benefit plan and, even fewer, 16 percent, cite an employee-funded defined contribution plan.