Retirement trends

 Worrying is an evolutionary survival trait that is hardwired into our brains; most of us seek to control and prefer order over chaos. There is no way around it; our instinct is to equate uncertainty with potential danger. The financial markets are volatile, and thanks to multiple round-the-clock financial news networks, we are reminded of this fact daily. We see the economy swinging between expansion and contraction. We read and watch pundits go on about the unpredictability of markets, Fed rates, and the economy. Given all of these factors, how can you worry less and have a happy retirement? One of the answers is to do some. financial planning for retirement. By planning you can:

·     Define what is important to you (your objectives, needs, wants, & wishes).

·     Set your own goals.

·     Evaluate your current financial situation.

·     Develop a retirement savings strategy.

·     Determine the best investments to meet your needs.

·     Anticipate inflation and economic volatility.

·     Monitor your progress, adjusting along the way.

With all this uncertainty how does one differentiate old retirement trends from new retirement trends.

Let’s take a trip down memory lane. Previous generations of retirees counted on pensions to enable their retirement. In the United States, government employees started receiving pensions in the mid-1800s, and many corporations began offering pensions to their retiring employees by the early 1900s. When pensions weren’t the primary source of income for retirees, Social Security would replace their earnings. Between pensions and Social Security income, many retirees of previous generations had predictable retirement income streams that they could never outlive.

Access to a time machine would likely show us that future retirees will not have the same predictable income. First, there is a dramatic decline in corporate pensions. In 1979, 87% of employees at medium and large companies participated in pension plans. As of 2017, only 16% of Fortune 500 companies offered “defined benefit pension plans”. Second, responsibility for retirement income has shifted from the employer (who provided pension plans) to employees who are now responsible for funding and investing in their own 401(k) or 403(b) plans. Third, even Social Security cannot be counted on fully; The Old-Age and Survivors Insurance (OASI) Trust Fund is on track to be depleted by 2034, meaning retirees will receive only 77% of their benefits. In summary, the old retirement trend included income predictability, while the new retirement trend does not. Hence, our human instinct to worry may be triggered.

Sixty-five used to be the magic number for retirement. To begin with, half of the state pension systems used 65 as the retirement age. Additionally, the federal Railroad Retirement System and most corporate pensions followed suit.

Today there is no definitive retirement age to target. Anyone born after 1938 must wait anywhere from a few months to a few years after turning 65 before becoming eligible for full Social Security benefits. Why? Few pensions are left, meaning most retirees have no guaranteed retirement income stream at age 65. While the old retirement trend was to work until age 65, the new trend leaves those not yet retired feeling uncertain about when they should retire.

70 is the new 60. We are living longer and healthier lives than our grandparents. With age comes wisdom, and with wisdom come possibilities. This reality leads to several questions: Do I want to work longer or part-time? Will I outlive my money? How can I optimize my retirement experience?

Financial planning and investing are multifaceted and complex, with many factors to consider, such as taxes, insurance, benefits, and tens of thousands of investment options. By working with a professional Wealth Advisor, you can reduce the uncertainty of retirement and enjoy the happy retirement of which you have always dreamed.

The Perfect Storm

The following is a summary of the research on  Factors Contributing to Lower  Retirement Confidence Among Women Who Are Not Married written by Craig Copeland, Ph.D. of the Employee Benefit Research Institute (pdf file)

The Retirement Confidence Survey (RCS) was conducted for its 32nd year in 2022 to measure attitudes toward, preparations for, and understanding of the various issues surrounding retirement by American workers and retirees. In 2022, the RCS found that Americans have near-record-high confidence in having enough money to live comfortably throughout retirement. However, unmarried women workers and retirees have lower retirement confidence than their married counterparts and are more likely to have lower incomes and assets. Unmarried retirees are also more likely to say that their expenses were higher than they expected and are more likely to have retired earlier than planned.

In this Issue Brief, the attitudes, considerations, and behaviours surrounding the retirement of women workers and retirees of different marital statuses are examined to provide greater insight into what can help improve women's retirement outcomes. Key findings are:

• Divorced and single, never-married women workers are more likely to have lower levels of financial assets than married women workers. Just 27 percent of married women workers have assets of less than $25,000 compared with just over half for divorced women workers (58 percent) and single, never-married women workers (56 percent). Married women retirees are also less likely to have lower levels of assets than divorced and widowed retirees.

• Married women workers are more likely to say that they are confident they will have enough money to live comfortably throughout their retirement years than both divorced and single, never-married women workers. Among retirees, married women are also more likely to be confident that they will have enough money in retirement than divorced or widowed women.

• Married women workers are more likely to agree that they feel knowledgeable about managing their day-to-day finances than single, never-married women workers. The share of divorced women workers who feel knowledgeable about managing finances is not significantly different from the share of married or single, never-married women workers.

• Both divorced and single, never-married women workers are more likely to agree that retirement savings are not a priority relative to the current needs of their family than married women workers. When asked about priorities aside from managing day-to-day finances, single, never-married women workers are more likely to choose purchasing a home or starting a business as the top-three longer-term financial planning priorities. Married and divorced women workers are most likely to say that saving and investing for retirement is among their top three longer-term financial planning priorities.

• When asked if individuals even know where to go to find good financial or retirement planning advice, one-third of women either strongly or somewhat agree with the statement that they do not know where to go for good financial or retirement planning advice. This is substantially higher for single, never married women, as 45 percent report that they do not know where to go for financial advice.

• Married women workers are the most likely to feel they have enough money to cover an emergency expense, while divorced women workers are the least likely to feel they can cover an emergency expense. Furthermore, married women workers are more likely to say they have done a retirement needs calculation than divorced or single, never-married women workers—49 percent compared with 35 percent each says they have done so.

• Women of each marital status who are offered a workplace retirement plan cite better explanations for how much income their savings will produce in retirement in their top four most valuable improvements to their workplace plan. However, divorced women are most likely to say that none of the possible improvements are the most valuable, whereas married and single, never-married women have three of the same four in their top improvements.

• Both divorced and widowed women retirees were more likely to have retired earlier than planned than married women retirees — 51 percent vs.42 percent. Women retirees of each marital status have equal likelihoods of retiring later than planned at just less than 1 in 10.

• When asked how their overall lifestyle in retirement now compares to how they expected it to be before they retired, a majority of women retirees say their lifestyle is about the same as they expected. However, married women retirees are more likely to say their lifestyle is better than expected, while divorced and widowed women retirees are more likely to say their lifestyle is worse than expected.

Ageing in Place in Canada, thinking about health and staying connected

 Staying connected

Staying connected to friends, family and community provide many benefits as you age. Social connections with community members of all ages can support physical, mental, and emotional health and well-being.

There are many ways to stay connected. These include having coffee with friends, joining support groups, taking part in recreational activities at your local seniors’ centre, taking general interest courses, working part-time or volunteering with a community program.

Staying healthy

Being active, eating well, and exercising regularly can reduce the risk of health problems and increase your energy levels.

For example, moderate, regular walking is low-cost, simple and one of the most popular ways to be physically active. It may also help you manage some health conditions.

Speak with your health care professional before starting an exercise program if you have health concerns or have been inactive for a while.

Good nutrition also helps to improve mental and physical well-being. Talk to your health care professional or a registered dietitian about how you can make sure your nutrition needs are being met.

•                    Am I eating well?

•                    Am I taking time to exercise regularly?

•                    Do I need to add more exercise to my daily routine?

•                    How can I safely stay active in different seasons (summer or winter)?

Ageing in Place in Canada, thinking about supports

 Thinking about supports

Some older adults find that they need some help with the day-to-day activities of living independently within their own homes.

The support and services people may need as they age will vary, as will the costs. Services and supports range from private (out-of-pocket) expenses to those offered through health care and social service systems.

When developing your plan to age in place, you should understand the supports and services you may need. Find out if they are available in your community and think about how much they will cost. A good place to start looking for information is at your local seniors’ centre or your health care provider.

Some assistance with support may be available through the government, but remember that not all seniors are eligible for all levels of assistance, and not all supports and services are covered or available in every community. Some services may be subsidized or there may be a cost involved, depending on your need and/or income. Your local seniors’ centre or health care provider can help you determine your eligibility for assistance.

•                    What supports and services are available in my community to help me with daily activities such as shopping, cleaning, yard care or snow shovelling?

•                    Where can I get help with bathing, grooming or other personal supports?

•                    How much will these services cost?