Much of retirement planning focuses on financial, investment, and estate planning needs. Earlier research, such as the SOA’s Retirement Health & Happiness brief, showcases how this retirement planning overlooks some challenges of late-in-life retirees.
Retirees have access to more than 200,000 personal finance professionals, 10,000 senior centers, and approximately 28,000 assisted living facilities. Still, do retirees have all the information they need to make critical decisions throughout retirement, particularly in the latter stages of retirement?
In collaboration with Financial Finesse, the SOA Aging and Retirement Strategic Research Program prepared this guide as a resource to help older retirees and those who assist them. This guide will help the reader ask impactful questions to make informed decisions.
Author(s): SOA Aging and Retirement Strategic Research Program
In the book Aging in the Right Place from 2015, author Stephen Golant provides a number of reasons why that “right place” might be the longtime family home:
•The advantages of a familiar neighborhood: the individual knows the shops and services and can navigate the area well even after physical or cognitive decline.
•The advantages of a familiar home: spatial competence (finding your way when the power goes out, navigating steps out of familiarity)
•Preserving familiar relationships – friendships and service providers.
•The attachment to possessions and pets is not disrupted (e.g., vs. moving to no-pets home); the home not only contains memories of the past but also reminders of past successes.
•The home affirms one’s self-worth; one fears (whether rightly or wrongly) that others will consider the person a “retirement failure” upon moving.
“The bitter truth is that an older person can succeed at remaining in her or his own home and still live a life as empty and difficult as that experienced by nursing home residents. Feeling compelled to stay in one’s home, no matter what, can result in dwindling choices and mounting levels of loneliness, helplessness, and boredom.”
This is a stark message. But here’s an even more discouraging problem: in my research on the issue, I encountered one repeated refrain. There is no solid scholarly research which asks the question: “which choice is the better one, in terms of future quality of life, to stay or to move?” It’s not an easy question, to be sure: simply looking at the quality of life of the elderly and comparing those who live in single-family homes vs. various kinds of “elder-friendly” housing would not adequately distinguish between those who moved due to some sort of health problem and those who moved with the aim of preventing future health problems, for example.
TRS currently uses a 7.25% assumed rate of return, which is on the higher end of investment return assumptions among major public systems.
The national average expected rate of return has fallen to 7.0% over the years, with major plans like CalPERS now lowering assumptions into the 6-7% range.
Despite SB12 (2019), with investment returns expected to underperform over the next decade relative to expectations, capping contribution rates in statute creates the perfect conditions for unfunded liabilities to keep accruing just as they have since 2001.
Roughly 2.4 million additional Americans retired in the first 18 months of the pandemic than expected, making up the majority of the 4.2 million people who left the labor force between March 2020 and July 2021, according to Miguel Faria-e-Castro, a senior economist at the Federal Reserve Bank of St. Louis.
The percentage of retirees returning to work has picked up momentum in recent months, hitting a pandemic high of 3.2 percent in March, according to Indeed. In interviews with nearly a dozen workers who recently “un-retired,” many said they felt comfortable returning to work now that they’ve gotten the coronavirus vaccine and booster shots. Almost all said they’d taken on jobs that were more accommodating of their needs, whether that meant being able to work remotely, travel less or set their own hours.
“This is primarily a story of a tight labor market,” said Bunker of Indeed, who added that there was a similar rebound in people returning from retirement after the Great Recession. “For so much of last year, the big question in the labor market was: Where are all the workers? This year we’re seeing that they’re coming back.”
“Notable changes made to the existing 2013 version include expanding the scope to clarify the application of the standard when the actuary selects an output smoothing method and when an assumption or method is not selected by the actuary.”
But this description obscures a significant new required disclosure, one which follows years of controversy and acrimony within and among actuaries and the public pension plan community at large. The requirement was the overwhelming focus during the drafting and comment period.
The new required disclosure reflects economic reality better than any currently required number.
Canada’s government acknowledges that the significant investments they seek in Canadian businesses and infrastructure must come mostly from the private sector. But in fact for decades, the country’s pension funds have been considerably reducing their domestic investments, a trend the feds and regulation are being taken to task for.
Tony Loffreda, independent senator from Quebec and former vice chairman of RBC Wealth Management, on May 12 asked the government’s representative in the Senate, Marc Gold, what the feds could do to incentivize Canada’s pension funds to invest more in Canada “without necessarily regulating free enterprise.”
The CPPIB’s 2021 annual report showed that in 2006, 64 percent of its assets were invested in Canada and the remaining 36 percent invested globally. But by 2021, the mix had changed to 15.7 percent in Canada and 84.3 percent globally.
The report outlined some of the reasons for the trend, singling out regulation.
“Plan sponsors are reacting in very predictable ways to their regulatory environment and the only way to change this behaviour is to change the environment,” LetkoBrosseau said.
It said regulation has over-emphasized short-term fluctuations in asset values, resulting in a shorter investment time horizon for pension fund assets. In contrast, pension savings, which represent 30 percent of Canadian savings, are typically invested for the long term and are meant to be managed such that they can take more risk to earn greater rewards.
UK pension schemes should not ignore climate change, a senior executive at The Pensions Regulator said on Monday, the first watchdog to weigh in after a top HSBC banker was suspended after playing down the financial risks of climate change.
Regulators across the world have been putting pressure on the financial services industry to take climate change into account when calculating risks to their business models.
Stuart Kirk, a senior HSBC banker in charge of sustainable investments, had said at an industry event last week that central bank policymakers and other global authorities were exaggerating the financial risks of climate change. read more
The bank has since suspended him pending an internal investigation, sources familiar with the matter told Reuters on Monday.
Days after Obama lamented Democrats’ 2010 electoral “shellacking,” his commission released a plan to slash Social Security benefits and raise the program’s eligibility age. Economist Paul Krugman noted at the time that the commission also suggested using newly gained revenue to finance “sharp reductions in both the top marginal tax rate and in the corporate tax rate.”
The plan ultimately did not receive the fourteen commission votes it needed to move forward, and a few years later in 2012, the House voted down a version of the proposal. That didn’t stop the Obama-Biden administration’s push: right after winning reelection — and after cementing much of the George W. Bush tax cuts — they tried to limit cost-of-living increases for Social Security, to the applause of Republican lawmakers.
Like Obama, Biden campaigned on a promise to protect Medicare and Social Security. But as we have reported, Biden is already affirming big Medicare premium increases and accelerating the privatization of that health care program. Biden also has not pushed to fulfill his promise to expand Social Security, even though there is new Democratic legislation that would do so.
And now with Graham’s comments, Republicans are banking on him becoming the old Joe Biden on Social Security if they win in November.
It’s not an insane political bet. After all, Biden for decades proposed cuts and freezes to Social Security and publicly boasted about it. Indeed, Biden spent most of his career depicting himself as an allegedly rare and courageous Democrat who was willing to push off his party’s base and tout austerity.
The premise for Chie Hayakawa’s film, “Plan 75,” is shocking: a government push to euthanize the elderly. In a rapidly aging society, some also wonder: Is the movie prescient?
TOKYO — The Japanese film director Chie Hayakawa was germinating the idea for a screenplay when she decided to test out her premise on elderly friends of her mother and other acquaintances. Her question: If the government sponsored a euthanasia program for people 75 and over, would you consent to it?
Close to one-third of the country’s population is 65 or older, and Japan has more centenarians per capita than any other nation. One out of five people over 65 in Japan live alone, and the country has the highest proportion of people suffering from dementia. With a rapidly declining population, the government faces potential pension shortfalls and questions about how the nation will care for its longest-living citizens.
Aging politicians dominate government, and the Japanese media emphasizes rosy stories about happily aging fashion gurus or retail accommodations for older customers. But for Ms. Hayakawa, it was not a stretch to imagine a world in which the oldest citizens would be cast aside in a bureaucratic process — a strain of thought she said could already be found in Japan.
Euthanasia is illegal in the country, but it occasionally arises in grisly criminal contexts. In 2016, a man killed 19 people in their sleep at a center for people with disabilities outside Tokyo, claiming that such people should be euthanized because they “have extreme difficulty living at home or being active in society.”