Archive | Finance RSS feed for this section

Grey Divorces Do Not Necessarily Lead To Loneliness

By on April 20, 2018 in Family, Finance, Lifestyle, Psychology
Photo Credit: Huffington Post

Photo Credit: Huffington Post

Recently, the attention paid to loneliness as a public-health issue has increased all over the world. In Britain, the Conservative government went as far as appointing a minister for loneliness. The Dutch government announced this month that it is investing $40.8 million to combat loneliness among its elderly population. In our own country, Canada, it was reported that 1.4 million elderly people experience feelings of loneliness.

More of us are living alone than at any point in the history of our nation. But living with someone does not preclude loneliness, as anyone in a bad marriage can tell us. And alone is not equivalent to being lonely. Which brings me to my key point – whether you are lonely or not, whatever your age, is a state of mind and an attitude. There is a social stigma that single people, particularly elderly people who are single, are naturally lonely. This is a myth that should be debunked.

I have posted twice in this blog throughout the years that grey divorces are on the rise. In Canada, divorce is spiking only among 50-plusers and becoming an increasingly common event for couples 65 and older. According to Statistics Canada, about one in five people in their late 50s were divorced or separated in 2011 (about 21.6 percent of women and 18.9 percent of men), the highest among all age groups. In the U.S.A., the divorce rate has decreased in every demographic since the 80s – except among baby boomers, where it has actually doubled. It is a similar story in the U.K. and Europe. In Japan, in the past two decades, couples married 30 years or more have seen their divorce rate quadruple. This international trend is so unusual that it has been dubbed the grey divorce revolution.

There are many reasons behind the grey divorces. With financial independence, boomers also want emotional and physical freedom. Turning 50 or 60 is no longer viewed as the gateway to dotage. With life expectancy now at around 80, the idea of going gently into that good night is no longer valid. The people who prefer to fly solo seem to be very content. The prospect of going it alone at a mature lifestage is scary – lifestyle adjustments, financial uncertainty maybe and telling the kids will be hard. But they are all young adults now. This is your time and you want to be free and happy! In an AARP survey of this trend, one theme surfaced again and again: It is now or never! 

The long-term prospects of happiness for grey divorcees are extremely rosy. Eighty percent of the AARP respondents reported having either a somewhat or very positive outlook on their post-divorce lives. And the good news for those interested in finding another relationship at this mature stage of their lives is that most people who are interested in finding one eventually do. To debunk another myth that baby boomers are not technologically-savvy, the number of boomers 50 or older using online dating sites has grown twice as fast as any age group in recent years. Men tend to re-partner more frequently after a divorce, because they typically have a much harder time than women being alone. Women are more comfortable relying on girlfriends when they need to share their experiences in life.

Having said that, between the years 1996 and 2006, the percentage of divorced Canadians intending to remarry dropped from 26 percent to 22 percent. In addition, more than 60 percent of divorced people stated they had no intentions of getting remarried at all. The steady divorce rate has been one of the contribution factors in the record number of one-person households in Canada. There has also been a continuing upward trend in the number of common-law unions – 21 percent in 2016 versus 16.7 percent in 2011. The key takeaways from these trends are: you are not trapped, regardless of age; and you do not need to fear being lonely, because you never really are.

There are certain steps to take after a grey divorce including understanding your current financial picture; revisit your estate plan; keep your emotions in check; communicating with your kids; and seek counsel and help from therapists, lawyers and financial advisors if necessary. Most important of all, as the AARP survey reflected, you can find happiness again no matter what age you are at.

Maybe the marriage model with a lifetime guarantee has officially been phased out. It is no longer realistic to expect to live a lifetime with the same person. Maybe boomers are looking for more quality than endurance. No more status quo if you are not happy. No more loneliness either. Boomers are starting a discussion about marriage again – it is now or never!

Comments { 0 }

Aging Population A Blessing Instead Of A Burden

By on July 25, 2017 in Demograhics, Finance, Marketing Campaigns, Media, Retirement, Travel, Workplace

retirement-travel-destination-ideas

It’s encouraging to see that The Economist has been focusing more on the positive aspects of aging populations in the last few years. As recently as three years ago in April 2014, the publication has dedicated a cover story to “A Billion Shades of Grey,” advocating changes in government policies to help accommodate the aging population. But the tone of that cover issue was more doom and gloom than positive – the concern about economic stagnation caused by the huge wave of baby boomers’ retirement was loud and clear in that story.

Then, in the April 9, 2016 edition of The Economist, the tone has become more positive with the article titled, “Older Consumers Will Reshape The Business Landscape.” The article advocated that companies should speed up in targeting this expanding “grey” market and cited examples of businesses around the world with innovative ideas appealing to older consumers. I’ve also echoed this view with my blog post last year titled, “Marketers Gradually Understand Potential Of Boomers.”

So I read with great delight the Special Report on The Economics Of Longevity in the July 8-14, 2017 issue of The Economist again. The report has basically argued that “if employers, businesses and financial services adapt to make far more of such people (the older population), big economic benefits for everyone could follow.” Employers need to change their attitudes towards older employees – ageist recruitment practices need to be discarded and corporate cultures have to change. Instead of reducing productivity and, therefore, hurting the economy, academics have found that older people in multi-generation teams tend to boost the productivity of those around them, and such mixed teams perform better than younger, single-generation ones.

The publication also argued that the second thing that needs to happen is for the benefits of longer, healthier lives to be spread much more equitably. There is currently too much of a gap between the rich and the poor among the older generation, and the best way to resolve this issue is for governments to invest in public health, offer universal access to healthcare and provide high-quality education for everyone. Although the report cited Canada as a good example of a country that manages to attach great importance to such matters, we see and read Canadian media reports everyday that lament how the older generation has not saved enough and cannot afford to retire.

I believe there is a third thing that needs to change: the marketing community and the media need to direct their energy and attention to the greying population. Over the last decade, there has been lacklustre progress in marketing to older people because this is not perceived as sexy. Young people continue to dominate marketing departments and think that the best place for the old is out of sight, out of mind. Although change is in the air, it is not happening fast enough. From aging rockers such as The Rolling Stones who can still fill huge concert arenas; to recent retirees who take on second careers as giggers and entrepreneurs; to older consumers who display young and active tastes in adventure travel and dating websites, “the new old” is defying old age and refusing to disappear into their sunset years.

In fact, The Economist is asking for a new branding of those over 65 but not yet elderly. The youngest Canadian boomers turn 51 and the oldest turn 70 this year. I used to call those people aged 65-70 “leading-edge boomers” and the younger ones “trailing-edge boomers”. But, perhaps, the marketing community can put their heads together and start coining a sexier term. Don’t call this group seniors although they are technically senior citizens. Baby boomers are starting to retire in large numbers in better health and with more money to spend than any previous generations. We feel much younger than our parents did at their age, and most of us have no intention of quietly disappearing from the world. The sooner the market can respond to this huge opportunity, the better our economy will be.

Comments { 0 }

A Friendly Budget For Mature Population

By on March 31, 2017 in Demograhics, Finance

artificial-intelligence-stock-image

It’s been more than a week after the highly anticipated 2017 Federal Budget announcement and there was hardly any analysis given from the perspective of boomers and seniors. So, I’ve decided to take a stab at it on this blog post.

Many critics said that one cannot look at the budget and dissect it according to age group benefits. But it’s inevitable that each demographic in Canada will naturally review the budget’s impact on their own lifestyle and financial well-being. From the perspectives of boomers and seniors, this budget is not bad even though there aren’t any new policies directly targeting at the mature population.

First and foremost, the relatively affluent boomers and seniors could temporarily take a big sigh of relief. The much speculated increase in capital gain tax – rumour had it that the government would increase the taxable portion from 50 percent to 62 or even 75 percent – did not eventually happen. This does not mean that the Liberals are not looking into a capital gain tax increase soon. So, a word of advice for boomers and seniors who are either planning to sell their investment property or their stocks: hurry up and do it soon before the government changes its mind. There are also no changes made to dividend tax rates or personal income tax rates.

What’s most welcoming news to the sandwich generation is that the new Canada Caregiver Credit in the new Federal Budget will deliver tax relief to those caring for an elderly or infirm family member without the complexity of the old system. There will only be one amount of $6,883 for infirm dependents who are parents or grandparents, brothers or sisters, aunts or uncles, nieces or nephews, and adult children. The Caregiver Credit will be reduced dollar-for-dollar by the dependent’s net income above $16,163 and the dependent will not have to live with the caregiver in order for you to be able to claim the new credit.

According to Global News, the 2017 budget found an extra $720 in spending for people over 65. The budget also earmarks $37.1 billion for the health transfer, and the government is expected to spend $43 billion on it in 2021, representing an increase of $5.8 billion a year. Of course, almost 50 percent of medical care spending goes to people who are aged 65 and older. Moreover, the age credit – which hands out money amounting from $1,069 to $7,125 to Canadians when they turn 65 years old and makes less than $83,427 in net income – still remains intact.

There are advocacy groups for younger generations, such as Generation Squeeze, which protested to the media that the new budget unfairly omitted younger people under the age of 45 even though there were childcare initiatives and a housing strategy designed to give every Canadian a safe and affordable place to call home. But we need to bear in mind that there are a lot of seniors facing huge challenges in their aging years. According to CARP, an organization that advocates on behalf of aging Canadians, over 600,000 seniors are living in poverty, including more than one in four single seniors, most of whom are women.

These are seniors who are having difficulty paying for their retirements when interest rates are low, and that older workers are facing ageism in the workplace and difficulty securing jobs. What I found most disappointing in the Federal Budget is that there are no attempts at embarking on baby steps to introduce a national drug plan. In the end, it’s the sick and poor who are going to suffer most from the lack of a universal pharmacare program.

Boomers and seniors should, however, feel encouraged that a large portion of the Federal Budget is dedicated to investing in the country’s Artificial Intelligence research which will eventually benefit the aging cohort with domestic robotic helpers or self-driving cars. We should also be pleased to hear that the government has a new funding proposal that could more than double Canada’s co-op work placements. The Globe and Mail pointed out that technology companies stand to gain from numerous funding and policy directives, including the three-year, $400 million Venture Capital Catalyst Initiative to boost late-stage capital availability, as well as $7.8 million in additional funding over two years for the Global Skills Strategy to attract outside talent. The Liberals’ budget contains measures that innovation-focused companies hope will make Canada more competitive on the world stage.

Scientists and researchers should also be encouraged by this budget with its commitments to refurbish government labs, renewed funding for stem-cell and quantum-computing research centres and a $125 million initiative aimed at leveraging homegrown expertise in artificial intelligence. I’m thrilled to see that the Liberals are obviously capitalizing on the opportunity for American scientists and researchers to possibly move to Canada in light of Trump’s budget cut of the National Institutes of Health, which spearheads medical research in the U.S. The Globe and Mail also pointed out that in Britain, a recent survey found that 42 percent of academics were considering leaving the country over worries about a less welcoming environment and the loss of research money that a split with the European Union is expected to bring. In contrast, Canada’s budget emphasizes on science and makes a pitch for diversity and talent from abroad, including a $117.6 million to establish 25 research chairs with the aim of attracting “top-tier international scholars.” The budget also includes funding for science promotion and $2 million annually for Canada’s yet-to-be-hired Chief Science Advisor, whose duties will include ensuring that government researchers can speak freely about their work.

On the other hand, the new Pan-Canadian Artificial Intelligence Strategy is intended to build on expertise within Canada – particularly in Montreal, Edmonton and the Toronto-Waterloo corridor – and keep a critical mass of top researchers from drifting away to Silicon Valley just as deep learning, a form of artificial intelligence pioneered in Canada, is poised to transform the technology landscape.

An investment in science, research and technology will certainly create more jobs for our talented youth and scientists and enhance Canada’s leadership in the world. Our nation is also currently perceived as a beacon, not only for democracy in the Western world, but also for our openness and our commitment to science. I, for one, am all for such visionary budget measures.

Comments { 0 }

Women Need To Better Prepare For Retirement

By on March 13, 2017 in Demograhics, Finance, Retirement

senior-businesswoman-working-800x533_c

Just on the heels of International Women’s Day, a report from the U.S. National Institute on Retirement Security indicated that across all age groups, women have considerably less income in retirement than men. For women aged 65 and above, their income is typically 25 percent lower than that of men. As men and women age, the gap widens to 44 percent by age 80. As a result, women were 80 percent more likely than men to be impoverished at age 65 and older, while women aged 75 to 79 were three times more likely to fall below the poverty level than men the same age.

This finding is neither surprising nor difficult to understand. In the U.S., working women, on average, earn less than their male counterparts, so they have less money to save for retirement. According to the Economic Policy Institute, American women’s media wage is 80 percent of men’s. Many women also take time off to raise children or care for an aging relative, which gives them fewer years to contribute to a retirement plan.

Canada’s situation is no better. According to new data from Statistics Canada released last week to mark International Women’s Day, Canadian women earned 87 cents an hour for every dollar made by men in 2015. The data, which reflects the hourly earnings of Canadians aged 25 to 54, shows the gender wage gap has shrunk by 10 cents since 1981, when female workers earned 77 cents for each dollar earned by men.

According to Statistics Canada, the ratio has improved, in part, due to rising educational attainment by women. In 2015, 35.1 percent of Canadian women had university degrees, compared to 13.7 percent in 1990. But even education does not completely erase that earnings gap. “Even when they had a university degree above the bachelor’s level, women earned an average of 90 cents for every dollar earned by men in 2015,” wrote Statistics Canada analyst Melissa Moyser in her report. “Women are overrepresented in low-paying occupations and underrepresented in high-paying ones.”

Like their U.S. counterparts, Canadian women are also more likely to work part time (18.9 percent for women and 5.5 percent for men), often because they are caring for their children. When measured by annual wages, Canadian women earned 74 cents for every dollar earned by men in 2015.

According to the U.S. Women’s Institute for a Secure Retirement, known as Wiser, a non-profit organization dedicated to women’s financial education and advocacy, financial problems in retirement and senior debt arise with insufficient income as a result of lower lifetime earnings and less in savings, costs of family caregiving and divorce. Moreover, women often choose to save for a child’s education over their own retirement, for example, or work in a family business for no pay. Women also live longer than men (81.2 years vs 76.4 years) according to statistics from the United States Department of Health and Human Services. In Canada, women have an average life expectancy of 84 years vs 79 years of men in 2012, according to a report on the Health Status of Canadians 2016 by the Chief Public Health Officer. Living longer and needing more money for the extra years for health care, medical expenses and long-term care needs creates serious problems for women. Running out of money in retirement and managing the rising costs of health insurance remain the top worries for women, according to a new study, “Women, Money and Power,” from the Allianz Life Insurance Company of North America.

The Allianz study also found that many women reported uncertainty about their financial decisions. Sixty-one percent of women wished they had more confidence in their financial decision making, and 63 percent wished they knew more about financial planning and investing.

For older women, the good news in terms of financial well-being is that a large fraction of women are working in full-time jobs past their 60s and even into their 70s, according to a study, “Women Working Longer: Facts and Some Explanations,” by Claudia Goldin and Lawrence F. Katz, Harvard University economists. The New York Times reported that the United States Bureau of Labor Statistics projects that by the end of this decade, about 20 percent of women over 65 will be in the labour force.

The same pattern is appearing in Canada as well. According to research released on March 9 by RBC Economics, the labour force participation rates of older Canadian women have increased, with a record 32 percent of women aged 55 and older taking part in the labour force in 2016.

Working longer makes it possible to enhance their retirement accounts and avoid tapping into them for living expenses. Employer-based health insurance also provides a security blanket for women who are working beyond retirement years. The extra years of earnings at an older age also mean that they could eventually retire with a bigger Canadian Pension Plan (CPP) amount.

For financial planners and marketers of financial institutions, the opportunity obviously lies in targeting more women clients and helping them make strategic financial decisions and better prepare for retirement. Women are often the CFO of the household. It’s about time that they take care of their own financial needs and security now.

 

Comments { 0 }

Increase In Start-Ups Targeting Boomers

By on August 16, 2016 in Branding, Demograhics, Entrepreneurship, Finance

shutterstock_281145677-750x410

North American entrepreneurs are increasingly seeing the potential of the baby boomer market. According to The New York Times, many companies are plugging into a wealthy slice of the over-50 demographic called the longevity market, whose annual economic activity currently amounts to US$7.6 trillion as estimated by AARP. With an estimated US$74.9 million baby boomers, according to Pew Research Center, the biggest market opportunity for start-ups is older Americans rather than hip millennials.

The staggering size of the total longevity economy has been attracting more entrepreneurs, deep-pocketed financiers and places to pitch new ideas in the past few years. New business ideas that cater to boomers include chefs, online dating sites and yoga instructors for people with health issues. Evelo, for instance, is an electric bike company in the U.S. which aims at making and marketing such vehicles, including one that folds, for older customers. Other services include companies that offer home downsizing, gyms for the 55-and-older demographic and meal kits for people with diabetes or heart conditions.

The New York Times further reported that AARP now holds yearly pitch events for entrepreneurs and even has its own incubator, The Hatchery. Entrepreneurs are also showing up at other events like the Silicon Valley Boomer Venture Summit and those held by Aging 2.0, a San Francisco innovation accelerator.

Many start-ups are trying new ways to reach their target audiences. Evelo, the bicycle company, uses a network of about 300 so-called brand ambassadors to market to potential customers. They have bought a bike, registered on the site to be ambassadors, and can opt to take prospective buyers on test rides. After a bike purchase, the ambassador gets a cash incentive.

CNBC also reported on the booming trend of baby boomer start-ups. Companies such as Honor, Stitch and even Amazon are trying to tap into the over-50 demographic with innovative technology, but more importantly products that are easy to use and provide a service to an aging population.

Stitch was only started two years ago to address social isolation among older adults. The site, which now has 50,000 members in 50 cities around the world, connects boomers and seniors so they can socialize, travel, make friends and find companions. It is based on a subscription service which costs US$80 per year or US$15 per month.

Another start-up success story in this category is Honor – a caregiving app that’s known as the Uber of home care. The company connects older adults with caregivers for short-term jobs.

Amazon’s Echo voice-recognition device, for example, is especially appealing to someone in the over-50 demographic with its “skills” and unique, hands-free capabilities. AARP believes that Amazon is leading the way for other start-ups to enter this market. According to Jody Holtzman, senior vice president of market innovation at AARP, voice recognition will take the friction out of issues of technology usage. “You add on Artificial Intelligence, machine learning, the connected home, autonomous vehicles… Amazon Echo is a great new entry point to this,” she said. Through AARP’s demonstrations to venture capital companies, American start-ups targeting baby boomers raised well over US$100 million within the last 18 months. The advocacy organization wants to get the venture capital community to recognize the scope and scale of the investment and business opportunities in this space.

In Canada, there is also an increase of start-ups targeting baby boomers but with less support from industry associations. As posted on this blog before, Canadian travel site www.blaycation.com focuses on helping boomers personalize and travel to their bucket- list destinations in style and appear to be doing well since inception about two years ago. Other budding Canadian entrepreneurial ideas seem to be sprouting up around caregiving for boomers’ elderly parents, taking care of boomers’ pets, and bricks-and-mortars as well as online fitness centres for the age-defying boomers themselves.

But what is lacking in Canada is a consistent industry-wide effort to provide advice and resources for business ventures targeting boomers. Apart from taking a booth at the annual zoomer shows in Toronto and Vancouver organized by Moses Znaimer’s Zoomer Media Group, there are hardly any well-organized initiatives that encourage business incubators in this sector. Perhaps, CARP in Canada should take a few lessons from AARP in the U.S. and provide a platform for start-ups aiming at the baby boomer demographic to pitch to the venture capital community.

Comments { 0 }