Raising Retirement Ages

I read an article called  Raise Retirement Ages By Joseph Chamie, that started with this “Raise retirement ages! That’s the simple, clear and unavoidable message that economics and demographics are sending to governments around the world.”

The author goes on to give some interesting ideas on why raising the retirement age is better for pension funds, current workers, and retired persons. He argues that postponing decisions on raising retirement ages create financial difficulties for governments, economic uncertainties for financial markets and investors, and worrisome anxieties for workers and families.

He goes on to say that Raising the statutory retirement age bolsters government pension programs by reducing the total outlay of benefits and encouraging men and women to work longer. It also increases the size of the country’s labour force and reduces the size of the retired population.

Moreover, working longer enhances a person’s potential retirement finances by generating more retirement savings and reduces the number of years spent in retirement. It also plays an important role keeping elderly persons active, mentally engaged and contributes to slowing down the rate of cognitive decline in old age.

He argues that the age at retirement for both women and men should be gradually raised to 70 years, without early retirement at reduced benefits. He chooses 70 because today the average person aged 70 is expected to live for another 14 years and by 2050 a person aged 70 will live until they are 90.

He reminds us that the earliest national pension programs were typically greater than life expectancies at birth. Germany, which was the first nation to adopt an old-age insurance program in 1889, lowered the retirement age from 70 years to 65 years in 1916, well beyond the life expectancy at birth at that time.

He dismisses alternatives to raising the retirement age including increasing taxes on workers and the wealthy, reducing pension benefits and readjusting national government budgets. The reason he dismisses the ideas is that these policies are opposed by various sectors of society. Vocal parts of the public can be expected to object, protest and even strike against even relatively small increases in the statutory age of retirement.

The reality is that while the average age when people actually retire is often lower than the statutory retirement age, the average age at retirement is no less than several years earlier than the official retirement age. So, the fact is that we as societies are moving toward earlier retirement as governments try to increase our retirement age.

At typical retirement ages, considerable variation exists across countries in the proportion of the population remaining in the labour force. For example, some countries have a sizeable percentage of their populations aged 65 years and older in the labour force, such as South Korea (35 percent), Iceland (32 percent) and Japan (25 percent). In contrast, many countries, especially in Europe, have relatively small percentages of their elderly population remaining in the labour force, including Spain (3 percent), France (3 percent) and Italy (5 percent).

Raising retirement ages from approximately 60 years to 70 years would increase the proportion of the population who would remain in the labour force as well as reduce the proportion of those who would be eligible for retirement benefits.

Simply raising the retirement age from around 60 years to 70 years would not only increase the size of the labour force, but it would also substantially reduce the size of the retired population receiving government-sponsored benefits. Retirement programs run by the government are designed to replace between 25 and 35% of a worker's income before retirement. Many workers continue to stay in the labour market to help make ends meet. Raising the retirement age is cruel to those who cannot continue to work and those who have to care for others who have chronic illnesses. A better approach is to provide alternatives so that people can save for retirement themselves. This can be done in many innovative ways and would help our economy more than having workers between 60 and 70 who do not want to work continuing to take jobs away from younger workers.

Some random thoughts to pass the day

Don't all those goody-goodies who tell you that life is "how you take it" make you want to scream? Me too, but let us have patience with them.

Life's not about how you take it, it's about the glory of living deliberately and crafting circumstances, magnetizing players and forging alliances, leveraging life and engaging the magic so that you can have the sun, the moon, and the stars.

What happens when someone worries?

Basically, they think of 100 reasons why something might go wrong. And all those thoughts then struggle to become things, sometimes overriding their more constructive thoughts. That is the power of worry.

Now, let us say you want something fantastic to manifest in your life.

Hypothetically, let us say you want a blog. 

Have you closed your eyes yet and imagined 100 reasons why it might come to you easily, fast, and harmoniously? I think you should.

Do you visualize?

You eat to nourish your body. You sleep to rejuvenate your spirit. You study, work, and apply yourself for emotional gains. You exercise to tighten your muscles. You listen to music to entertain yourself.

You are not at all averse to investing time and energy for the rewards you seek.

So how about you spare just a few minutes every day to visualize the life of your dreams? Because nothing else you could ever do will make such a profound difference in your fortunes and misfortunes as working with new pictures in your mind.

Can you start today to think good thoughts?

When you think a new thought, entertain a new dream, or mentally choose a new goal, your thoughts "leave" you and go out — in every direction — to the farthest corners of the planet. They carry a life force all their own, like ripples created when a pebble is tossed into a pond.

You cannot change this, but you can totally use the heck out of it.

Think good thoughts.

Exercise and Anxiety

 A Swedish study analyzes data from 400,000 people of both sexes, which tracked them for up to 21 years explored exercise’s lasting benefit when it comes to preventing anxiety disorders. The study looks at how exercise intensity corresponds to a reduction in anxiety for both men and women over the long term. The study appears in Frontiers in Psychiatry. The participants in the study had a nearly 60% lower chance of developing anxiety disorders over the follow-up period of 21 years than individuals in the control group.

Some individual studies suggest that exercising at high intensity levels may be most beneficial for improving anxiety symptoms. One hypothesis is that exercise at higher intensity mimics sensations that are feared in those with anxiety (e.g., heart racing, shortness of breath, sweating) and may act as an exposure to get more comfortable in the context of these sensations.”

The study’s authors suggest that “many individuals who have anxiety will avoid exercise to avoid these physical sensations. Therefore, it may be important to study interventions to increase exercise engagement among individuals who are fearful of exercise-induced physical sensations.”

The researchers excluded people who developed anxiety within 5 years of the race. To reduce the risk of bias due to reverse causation, in which individuals may already have anxiety symptoms that keep them from engaging in physical activities such as the ski race.

The Anxiety & Depression Association of America does not make recommendations regarding exercise and anxiety disorder because there are no guidelines for the specific dose of exercise required to improve mental health symptoms.

To identify a large cohort of people leading an active lifestyle, the researchers studied people who took part in the world’s largest long-distance cross-country ski race, the Vasaloppet in Sweden, between 1989 and 2010.

That control population included individuals who were similar to the skiers in their region of residency and their age group and sex. The researchers did not include people with dementia or other severe diseases, such as heart disease or cancer, in the study. They also ensured that none of the participants had psychiatric disorders, including anxiety disorders.

Exercise is good for you and continuing an exercise routine may help keep you healthy. 

Life milestones

 Ask any Canadian to name the life milestones they should be planning for, and chances are retirement will land in the top three. In 2020 the Aegon Center for Longevity and Retirement (ACLR) said that globally, workers expect they’ll need to replace two thirds (67%) of their current income in retirement, but just 35% of Canadians think they’re on course to hit that goal. Less than half of Canadian respondents (42%) said they constantly save for retirement; 26% said they save only on occasion, and 15% said they don’t save enough but plan to.

More recent research from Healthcare of Ontario Pension Plan (HOOPP) and Abacus suggests things haven’t gotten much better. Drawing from an April 2021 survey of 2,500 Canadians, they found that even though 46% were able to save more money during the pandemic, nearly two thirds (63%) of all respondents haven’t been saving One of our most significant findings are that Canadians, by and large, are falling short with the individual options for retirement saving and investing.

New research from Aon (a leading global professional services firm providing a broad range of risk, retirement and health solution), the average Canadian worker – defined as a 45-year-old with annual earnings of $60,000, and with a workplace retirement savings plan that has 5% employee contributions and 100% employer match – will need to accumulate 10.9 times their final pay to maintain the same spendable income after they retire. That level of “retirement income adequacy,” as defined in the report, considers changes in savings, taxes, medical expenses, and other factors.

In a report titled The Value of a Good Pension: How to improve the efficiency of retirement savings in Canada, Common Wealth and HOOPP found that compared to individual saving, a pension-based retirement arrangement creates additional value for working retirement savers through five drivers: automated and consistent savings, lower fees and costs, professional investment discipline, fiduciary governance by in-house professionals, and efficient pooling of investment and longevity risks.

The problem is that for many Canadians, deciding between an RRSP or a TFSA can be a very confusing process, and if you are making that decision to help fund your retirement then look for a certified financial planner to help.