Everybody wants to live a longer life, but to a lot of Canadian boomers and seniors, longevity may actually become their biggest enemy. According to a recent national survey by the Financial Planning Standards Council (FPSC) and Credit Canada, one quarter of Canadian seniors fear they will run out of money before they die and the same 25 percent worry they won’t be able to pay for long-term care. Others fear not being able to pay off their debt; not having enough money to retire; having to sell their house, or needing to depend on their children for financial support.

The survey also reveals that 20 percent of Canadians are working past the age of 60, and six percent of those are 80 or older. Three in 10 of those working past age 60 say they can’t afford retirement, one in eight have too much debt, over 25 percent don’t have enough savings, and 12 percent are still helping their children financially. Only one-third say they continue to work because they enjoy their job.

Indeed, a worry-free retirement may be a thing of the past, according to another recent Sun Life Financial Survey, which finds that a quarter of retired Canadians are in debt in their golden years. About 25 percent of the 750 Canadians polled between the ages of 55 to 80 years said they have debt that ranges from mortgages to car payments. Retired Canadians on average had $11,204 in non-mortgage debt, according to the survey. Unlike a Bank of Nova Scotia commercial most famous for its tagline “You’re Richer Than You Think,” people are actually poorer than they think.

The FPSC survey report shows that 56 percent of Canadians age 60 and older carry at least one form of debt, with a quarter carrying two or more types of debt. Credit card debt leads the way at 32 percent, followed by lines of credit (23 percent), mortgage debt (19 percent), and auto loans (14 percent). Thirty-five percent of seniors age 80 and older are carrying at least one form of debt, including credit card debt (24 percent) and car loans (9 percent).

For single boomers and seniors, the situation is even more dire. The latest Statistics Canada data show that 51.5 percent of people aged 15 and over are unmarried, making the first time that unmarried people have outnumbered married people since census information began to be compiled in 1871. According to an Investors Group survey of more than 2,600 Canadian baby boomers, many are concerned about who will take care of them in retirement, and 43 percent expect they will need to work longer because they are single. The survey also found that 40 percent of single boomers don’t have a financial plan designed to meet the needs and expenses of being single.

Expenses such as housing, utilities and cars can take a big bite out of income when only one person is paying for them. Aging singles are more likely to need housekeepers, home health care and maintenance help than those who can rely on a spouse for assistance in some areas. While a couple may be able to remain in their home longer because there are two people to help each other, a single person may need to move to an assisted-living facility at an earlier age.

According to financial planning experts, a single person will need as much as 30 percent more retirement income than a couple to live in a comparable lifestyle and meet the additional expenses of being single. Increasing longevity also plays a role in retirement costs with many people now living into their 90s. Because women usually live longer than men by an average of five years, chances are that more women will end up single even if they are not single now. Of the 4,000 Canadian centenarians, 3,400 are women, according to StatsCan data. Research also shows that by age 80, one in three men and two in five women will spend time in a nursing home.

With these doom and gloom statistics, it’s surprising that not more financial planners and insurance companies are offering and marketing financial products such as annuities, reverse mortgages and others that would help alleviate Canadian boomers’ and seniors’ anxieties about outliving their savings. According to another survey by Ipsos for RBC Insurance, only 12 percent of Canadians say they are using or planning to use an annuity to ensure they have enough money to lead their chosen lifestyle in retirement. Most Canadians, however, are unaware of annuities and lack an understanding of the product, which can be the reason why few are building them into a retirement plan. For Canadians who have a home, most do not understand whether they should look into reverse mortgage, home equity line of credit, or annuities to help fund their retirement. With the rising rate of single households, most financial institutions are not doing enough to help single people plan their retirement.

The Globe and Mail recently reported on a new C.D. Howe Institute report that advocates longevity insurance as a new financial product that could help fund long retirements. The report suggests that what’s needed for retirees is a product that could allow a 65-year-old to purchase a guaranteed-for-life stream of income that doesn’t actually begin until he or she is in her 80s. A person who was able to purchase longevity insurance could feel free, in an extreme case, to spend every penny in their portfolio between the ages of 65 and 85. The buyer would know that at the age of 85, their longevity insurance would start paying them a regular income which would last for the rest of their lives. The report also recommends that the Federal Government could radically simplify Canadian retirement planning with a few simple, low-cost changes to the tax code in order to allow such an innovative product to be introduced.

Although this ideal product would be similar to the annuities now on the market, the annuities that currently exist start paying out money immediately, but longevity insurance would not start paying out until a couple of decades in the future. A longevity insurance product is not without its challenges: someone buying such a product today would face the risk they might never collect on the insurance if they die before the date that payments begin. But that risk could be offset by the obvious positives, especially for people with reasonably large, but not huge, retirement portfolios. Longevity insurance, if priced correctly, would nearly certainly be far less expensive than accumulating the big amount of money that would otherwise be required to ensure a couple can live comfortably until the age of 100 or even beyond.

According to Don Ezra, author of the C.D. Howe Institute report, the problem why longevity insurance is not already available  in Canada is the country’s tax code. Its punitive approach to taxing deferred-payment products has deterred annuity providers from coming to market with such products. Under existing rules, buyers of longevity insurance would be forced to pay tax on gains in the underlying portfolio even in the years before they started collecting money. Of course, nobody is going to buy a product that would require them to pay tax today on future income, especially if they might not live long enough to even receive that income.

Mr. Ezra recommends that the rules would have to be altered to tax the income from longevity insurance only when it actually gets paid out. Longevity insurance products would also have to be made exempt from the minimum-withdrawal rules in tax-sheltered accounts. Changing the tax code to reflect those shifts should not cost other taxpayers much, if anything. The same total pool of money would still wind up being taxed; it would only be the timing that would shift. Let’s hope Ottawa would listen to this suggestion and pave the way for a very useful new product for our aging population who might be concerned about the possibility of outliving their money.

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!

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.

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.

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.