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: Linkmedia 360

I see an emerging Canadian real estate trend mirroring that of the U.S. – millennials and seniors, the most unlikely roommates, are now increasingly sharing a home together. The Globe and Mail recently reported that with the rise of Canada’s rents while the vacancy rate shrinks, a growing number of seniors are living in homes too big, while young Canadians squeeze into apartments too expensive. The concept of home sharing – where the homeowner, usually a senior, offers reduced rent for a room in their home in exchange for small chores and companionship – is getting attention in small towns and cities across the country, including a new pilot project in Toronto this summer.

The publication reported that this month, Boston expanded the use of a new housing app called Nesterly – co-developed by a MIT-grad and billed as a socially-conscious solution to both loneliness and soaring housing costs – which creates home-sharing matches between seniors and cash-strapped university students. Sometimes, it’s not only students who are in a financial bind. In January this year, The New York Times reported that many older Americans, who discovered that their savings had dwindled, were looking for millennials to share their homes and split the utilities and the rent equally. For many baby boomers entering retirement, financial security is also increasingly hard to come by. Many North Americans have not saved enough to maintain their pre-retirement living standards. Increased life expectancy and lower interest rates only exacerbate the situation.

In addition to apps like Nesterly, non-profit organizations, such as the New York Foundation for Senior Citizens, have been operating a home-sharing service since 1981, matching people who have space in their homes with those in need of affordable housing. It is one of a number of similar programs that have emerged across the country as the population of older Americans grows, as a way to help people stay in their homes.

Similarly, across Canada, affordable-housing advocates have proposed home sharing as a creative option for communities trying to balance a rapidly aging population and a shortage of affordable, long-term rental properties. The most successful home-sharing programs involve a step-by-step process that carefully matches homeowners and tenants, requiring funding for trained facilitators. Whether we like it or not, many Canadian trends follow those of our southern neighbours. A lot of these new projects are modelling themselves after a non-profit organization in Vermont, now more than 30 years old, where matched candidates meet, have trial stays and, if both agree, sign a clear contract that outlines expectations and rules while they live together.

Nesterly, which started as a pilot with the city of Boston last year, focused on university students and expanded in July to include the entire city population, works like a dating app, allowing potential tenants to post confidential profiles that can be matched to homeowners. The team at the Boston app also conducts criminal-record checks and follows up on references, then allows homeowners to choose from a number of matches. In its pilot year, the program made 10 matches – there are now another 50 active “hosts” on the platforms with thousands of home seekers to choose from.

Nesterly staff also help facilitate interviews and finalize detailed home-sharing contracts and even collect the rent on behalf of the homeowner, while taking a small percentage, and a fee for offering continuing support. Millennials chosen by seniors homeowners often help with snow shovelling, walking the dog, gardening, the occasional shelf-hanging, or chatting to the seniors about any topics of shared interest.

For the older homeowners, having younger company is also potentially a lifesaver. Seniors have a tendency to fall at home and could be assisted by their younger roommates or tenants when such accidents occur. In return for the physical labour provided by the millennials, some older homeowners leave homemade meals for them on the table by the front door.

According to a 2017 study by the Canadian Centre for Economic Analysis, Ontario alone has five million spare bedrooms and three-quarters of the province’s seniors live in houses too large for their needs. Home sharing may not solve Canada’s housing woes, but advocates say it’s an example of how more solutions should go beyond windows and walls.

I’m also glad to see that a provincially-funded pilot project for Toronto will begin this summer – an initiative undertaken by the National Initiative for the Care of the Elderly at the University of Toronto. Tonya Salomans, a social worker who is coordinating this project, sees home sharing as an option for generations to mingle and learn from one another, to improve the health of isolated seniors, while helping young people cover rent. The goal is to match 20 seniors with university students and then follow how well the living arrangements work.

Outside Ontario, this fall, a group of housing advocates in Nova Scotia plan to tour communities promoting options such as home sharing. The Globe also reported that a Burlington entrepreneur has started the Homeshare Alliance, a business that matches people and guides them through the contract stage for a fee.

Of course, home sharing is not for everyone. Seniors have to be flexible (a rare quality to have when you’re aging), enjoy people and set clear rules from the beginning. For those who are willing to give this creative solution a try, home sharing may be the best way to integrate the young and old in society.

Photo Courtesy: Forrec

The real estate sector has been gradually capitalizing on the opportunity presented by the greying population in North America. The New York Times today reported how Long Island witnesses the growth of country-club-style living in communities for people 55 and older. Resort-like active adult lifestyle communities are increasingly becoming popular. Developer Beechwood Homes is building the largest resort-like community, Country Pointe Plainview, on Long Island featuring an 80-acre property that includes an adjacent shopping centre, an amenity-laden clubhouse, two heated pools, tennis courts and a walking trail. According to the company’s Founder and Chief Executive Michael Dubb, just don’t call it a retirement community. “People are going there to feel young and act young,” he said. The 750 age-restricted condo flats and townhomes  all have first-floor master bedrooms.

With many boomers now in their 60s and 70s, the surge in senior housing is happening everywhere as many older adults and empty nesters move from single-family houses into multifamily developments and condos. They are healthy enough not to need assisted living yet, and they thrive in a community with a lot of social interaction and plenty to do – indoor and outdoor pools, a fitness centre, a billiard room and space for card games, fitness and yoga and other activities.

According to the U.S. National Association of Home Builders, by 2019, households headed by someone 55 or older will constitute more than 45 percent of all American households. Developers nationwide hope to appeal to those greying boomers as they downsize.

The same trend in real estate is also taking place in Canada. As reported by Canadian Business last year, the 114-acre site of St. Elizabeth Village, Hamilton, is a successful independent-living retirement living complex with 900 residents actively participating in classes, social events and recreational activities everyday. The developer, NovaCore Communities Corp., recently announced an $800-million renovation that will transform the site into a themed lifestyle community with a population increase to 3,000. They’ve hired Toronto-based Forrec which is best known for designing and building theme parks in 30 countries outside Canada, including Germany’s Legoland, Universal Studios Florida, and a massive water park in Beijing, China. Forrec has also designed a retirement community in the U.S. similar to the vision planned for St. Elizabeth Village – The Villages in Sumter Landing, Florida – which offers daily entertainment, sports and other activities for its population of 160,000. The U.S. Census ranked The Villages as the fastest growing American city two years in a row.

“We don’t like to call it a retirement community,” says Gordon Donett, Forrec’s CEO. “As soon as you say that, you think it’s a bunch of old people sitting on couches watching TV. And that’s the exact opposite of what we’re working on.” Forrec will remake St. Elizabeth into a pastoral mill town, complete with a spinning water wheel and old-time windmill, and carry the aesthetic throughout the development. The company says the theme will imbue St. Elizabeth with a sense of history, strengthen community ties and emphasize that the site is a real town, not merely a collection of homes for people living out their final years. The entire expansion plan for St. Elizabeth will take approximately a decade to finish.

According to the Conference Board of Canada, by 2051, retirees are expected to represent a quarter of Canada’s entire population and by 2030, roughly 80 percent of new housing demand will come from people entering retirement. There are nearly 300 independent-living, adult-lifestyle communities in Ontario alone. Branding and differentiation are key in marketing retirement living. Forrec focuses on creative themes and storytelling and tries to debunk the myth of aging – it’s not necessarily true that older people will withdraw in their twilight years. Instead of the usual gated retirement communities, St. Elizabeth, with its town square and retailers, could actually entice outsiders to visit. In that way, it’s much more integrated with surrounding towns, encouraging socialization and preventing residents from feeling isolated.

Only time will tell whether the success of The Villages in Florida can be replicated here in Hamilton. I certainly want to see more of such developments in Toronto as well. Retirement homes and communities have been around for a long time, but until now, there had not been a focus on creating a lifestyle for baby boomers. As I’ve mentioned many times before, we boomers defy the ageing process – it’s high time that developers understand our mentality and create age-restricted housing that is unique and caters to our needs.

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.

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.