Boomertirement -- is this really a "crisis?"
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Re: Boomertirement -- is this really a "crisis?"
Hmm, I just read one of the most disappointing PF books, the updated for 2012 'Money Sense Guide to Retiring Wealthy'. Mostly because it gives anecdotal or to quote "check in with our fictional couple... To see if you're where you should be. All figures reflect those of a typical Canadian family ..." It has their fictional but typical couple, John and Mary, by age 55 with a net worth of $450,000 including a $300,000 house just fully paid for and financial assets of $150,000. They're okay because they can strap down and use up lots of their unused RRSP room to 'supercharge' their savings....
It makes excuses and justifies why you get in debt in you 20s, have to pay it off in your 30s, barely get by in your 40s because of mortgage and child rearing obligations, and then have to make up for all that in your 50s. No wonder it was "one of the best selling retirement guides in the country". It completely tells what most people are looking for. Reaffirmation of what they are doing. What if I picked this up in my 20s and had no interest beyond that in pursuing info about PF...
It makes excuses and justifies why you get in debt in you 20s, have to pay it off in your 30s, barely get by in your 40s because of mortgage and child rearing obligations, and then have to make up for all that in your 50s. No wonder it was "one of the best selling retirement guides in the country". It completely tells what most people are looking for. Reaffirmation of what they are doing. What if I picked this up in my 20s and had no interest beyond that in pursuing info about PF...
Re: Boomertirement -- is this really a "crisis?"
Boomer -- and boomers' children -- don't think there is a retirement crisis. Inheritances will take care of it.
George
See? Problem solved. Somebody better tell Jim Flaherty and the provincial premiers.We’ve become a nation of waiters. Not the type ready to serve you lunch but serious spenders banking on an inheritance to get us out of our financial jams.
<snip>
The long-held view that Baby Boomers are about to hit the jackpot is backed up by a now often-quoted study by Decima Research in 2006 that found about $1-trillion was expected to be passed on to the next generation over 20 years.
It’s unclear how much of that money has passed on since that study was done but anecdotal evidence suggests it has already found its way into the hands of some in the next generation — with realtors even suggesting it is behind the never-ending Canadian housing boom.
The inheritance theme is not one that appears to be disappearing. An HSBC Bank report released in September, 2013, found 39% of working people are banking on some type of inheritance with the median value expected to be $77,213.
They’ll probably get their money because the same survey found 57% of fully retired people plan to leave some sort of inheritance with a median value of $175,541 given. Some of the gap between what people plan to leave and what they expect to receive might be explained by taxes that will be owed.
George
The juice is worth the squeeze
Re: Boomertirement -- is this really a "crisis?"
It's actually funny but several people I know who are or will be in a jam have been or will be saved by inheritance, even if it is only coming into a modest primary residence which is not mortgaged.ghariton wrote:Boomer -- and boomers' children -- don't think there is a retirement crisis. Inheritances will take care of it.
See? Problem solved. Somebody better tell Jim Flaherty and the provincial premiers.We’ve become a nation of waiters. Not the type ready to serve you lunch but serious spenders banking on an inheritance to get us out of our financial jams.
<snip>
The long-held view that Baby Boomers are about to hit the jackpot is backed up by a now often-quoted study by Decima Research in 2006 that found about $1-trillion was expected to be passed on to the next generation over 20 years.
It’s unclear how much of that money has passed on since that study was done but anecdotal evidence suggests it has already found its way into the hands of some in the next generation — with realtors even suggesting it is behind the never-ending Canadian housing boom.
The inheritance theme is not one that appears to be disappearing. An HSBC Bank report released in September, 2013, found 39% of working people are banking on some type of inheritance with the median value expected to be $77,213.
They’ll probably get their money because the same survey found 57% of fully retired people plan to leave some sort of inheritance with a median value of $175,541 given. Some of the gap between what people plan to leave and what they expect to receive might be explained by taxes that will be owed.
George
Show me the incentive and I will show you the outcome
--Charlie Munger
--Charlie Munger
Re: Boomertirement -- is this really a "crisis?"
Doesn't always work out as expected though ... Surviving parent remarries. New spouse inherits.
Re: Boomertirement -- is this really a "crisis?"
Yes and it's a shame when that happens. From what I've seen, that happened a lot more in the past (just as marriage rates for young people are plummeting) but people are catching on and acting accordingly. At least people who like their kids and want them to inherit their assets. Also, this does little in the macro picture but change the name and timing of the eventual winner(s): wicked stepmother and her four children born out of wedlock have a blast spending Mr Nice Guy's estate as Mr Nice Guy's kids watch in horror.DenisD wrote:Doesn't always work out as expected though ... Surviving parent remarries. New spouse inherits.
Show me the incentive and I will show you the outcome
--Charlie Munger
--Charlie Munger
Re: Boomertirement -- is this really a "crisis?"
I know people like that too. They no plans and no savings; money is blown as it comes in. After they get their inheritances, the money will soon be gone spent on cars, boats, trips,... The best thing for them would be to buy a life annuity, but there's no fun in that.FinEcon wrote: It's actually funny but several people I know who are or will be in a jam have been or will be saved by inheritance, even if it is only coming into a modest primary residence which is not mortgaged.
Re: Boomertirement -- is this really a "crisis?"
Haha and a life annuity is no good because 'you might die tomorrow'. It's amazing what a modest inheritance can do for prolonging an unsustainable standard of living. From what I've seen, most people don't really upgrade, they just increase quantity, i.e. Ford people don't become Audi people, they just get the decked out F-350 and maybe tack a couple sleds on the back. Man it must be fun to live like every week is the end of the world.Insomniac wrote:I know people like that too. They no plans and no savings; money is blown as it comes in. After they get their inheritances, the money will soon be gone spent on cars, boats, trips,... The best thing for them would be to buy a life annuity, but there's no fun in that.FinEcon wrote: It's actually funny but several people I know who are or will be in a jam have been or will be saved by inheritance, even if it is only coming into a modest primary residence which is not mortgaged.
Show me the incentive and I will show you the outcome
--Charlie Munger
--Charlie Munger
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Re: Boomertirement -- is this really a "crisis?"
Could be.
http://www.thestar.com/news/gta/2013/03 ... llion.html
Still, I think the value of inheritances is overstated. There will come a great die-off among the retired -- the more of them, the greater the impact, so the children of boomers will be affected, simply because there were so many boomers (1947-1966).
The financial assets may remain intact -- governments and corporations will meet their coupon obligations. Life annuities are obviously lost, unless there's a back to back annuity. But what happens to real estate? A lot of housing will come onto the market, but will there be buyers?
Probably not among late boomers (Gen-X, 1958-1965), perhaps among Gen-Y (1966-1980) doubtfully among millenials (1980-) who were stiffed in the job market. Unless, of course, there is massive immigration.
http://www.thestar.com/news/gta/2013/03 ... llion.html
Still, I think the value of inheritances is overstated. There will come a great die-off among the retired -- the more of them, the greater the impact, so the children of boomers will be affected, simply because there were so many boomers (1947-1966).
The financial assets may remain intact -- governments and corporations will meet their coupon obligations. Life annuities are obviously lost, unless there's a back to back annuity. But what happens to real estate? A lot of housing will come onto the market, but will there be buyers?
Probably not among late boomers (Gen-X, 1958-1965), perhaps among Gen-Y (1966-1980) doubtfully among millenials (1980-) who were stiffed in the job market. Unless, of course, there is massive immigration.
Wovon man nicht sprechen kann, darüber muß man schweigen — a wit
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finiki, the Canadian financial wiki Your go-to guide for financial basics
Re: Boomertirement -- is this really a "crisis?"
I'd like to see more research/discussion on how the reduction of DB pensions will affect income disparity amongst tomorrow's seniors. That is, we currently have a cohort of seniors and Boomers who will be largely relying on a DB pension for their retirement income. Once they pass, that pension stops, and there is no "lump-sum" value to be passed on to heirs. The only inheritance is whatever other assets the decedant had remaining. Thus, Gen-X-ers stand to inherit modest estates. Those who didn't inherit anything weren't widely separated from those who did. Everyone is on a relatively level playing field when it comes to inheritances.
However, current generations have DC pensions rather than DB, which means that when they pass, there is the potential for a much larger estate. Those with parents who socked away for retirement stand to inherit significantly bigger estates, which (in my opinion) should manifest as a widening divide between the "haves" and "have nots", at least as it pertains to inheritances. Moreover, with today's generations having fewer kids, those larger estates will be divided amongst fewer siblings, increasing their stake even more.
I'm curious if, in another generation or so, we'll see a cohort with retirement homes filled with Gen-Y-ers and Millennials who inherited nothing or very little, and their only-child peers living the high life on large inheritances courtesy of parents who didn't have DB pensions but had the foresight to save for their own retirement.
However, current generations have DC pensions rather than DB, which means that when they pass, there is the potential for a much larger estate. Those with parents who socked away for retirement stand to inherit significantly bigger estates, which (in my opinion) should manifest as a widening divide between the "haves" and "have nots", at least as it pertains to inheritances. Moreover, with today's generations having fewer kids, those larger estates will be divided amongst fewer siblings, increasing their stake even more.
I'm curious if, in another generation or so, we'll see a cohort with retirement homes filled with Gen-Y-ers and Millennials who inherited nothing or very little, and their only-child peers living the high life on large inheritances courtesy of parents who didn't have DB pensions but had the foresight to save for their own retirement.
Re: Boomertirement -- is this really a "crisis?"
Not that it invalidates any of what you are saying but I think you have your dates/definitions mixed up. Those aren't the generally accepted timelines for those groups.parvus wrote:Probably not among late boomers (Gen-X, 1958-1965), perhaps among Gen-Y (1966-1980) doubtfully among millenials (1980-) who were stiffed in the job market. Unless, of course, there is massive immigration.
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Re: Boomertirement -- is this really a "crisis?"
Only the potential. The US DC experience now spans two generations and account balances are typically not high enough to fund retirement for the account holder, let alone his/her estate. Here is the latest report I found: average account balance for those 55+ and still working was $269,500. And that was after a year of very strong stock market gains.kombat wrote: However, current generations have DC pensions rather than DB, which means that when they pass, there is the potential for a much larger estate.
Remember too that in Canada a DC balance -- whether RRSP or RPP -- is fully taxed in the year of death of the spousal partner.
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Re: Boomertirement -- is this really a "crisis?"
Prof David Foot's segmentation in Boom Bust and Echo (based on birth rates):Koogie wrote:Not that it invalidates any of what you are saying but I think you have your dates/definitions mixed up. Those aren't the generally accepted timelines for those groups.parvus wrote:Probably not among late boomers (Gen-X, 1958-1965), perhaps among Gen-Y (1966-1980) doubtfully among millenials (1980-) who were stiffed in the job market. Unless, of course, there is massive immigration.
Boom: 1947-1966
(Gen X: 1960-1966)
Bust: 1967-1979
Baby Boom Echo: 1980-1995
Millennial: 1995+
Re: Boomertirement -- is this really a "crisis?"
@kombat: Agreed that if there is no surviving spouse, a DB retiree that dies earlier than expected may not leave much of an estate. (although some pensions have a guarantee period?) But I believe that for a 'normal' lifespan the DC retiree has a good chance of running out of money, while the DB retiree is quite possibly bringing in more than their lifestyle requires and is thus building up more estate value every month.brucecohen wrote:Only the potential. The US DC experience now spans two generations and account balances are typically not high enough to fund retirement for the account holder, let alone his/her estate. Here is the latest report I found: average account balance for those 55+ and still working was $269,500. And that was after a year of very strong stock market gains.kombat wrote: However, current generations have DC pensions rather than DB, which means that when they pass, there is the potential for a much larger estate.
Re: Boomertirement -- is this really a "crisis?"
I think it is a very small segment of our workers who would have amassed small fortunes in DC and RRSP plans and that this small segment wil not be recognizable in the overall scheme of things.
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Re: Boomertirement -- is this really a "crisis?"
Well, according to the 2006 Decima study quoted in the article I cited, baby boomers will leave inheritances totalling some $ 1 trillion. Some of that will be in the form of real estate, but not all of it.AltaRed wrote:I think it is a very small segment of our workers who would have amassed small fortunes in DC and RRSP plans and that this small segment wil not be recognizable in the overall scheme of things.
George
The juice is worth the squeeze
Re: Boomertirement -- is this really a "crisis?"
I would guess the majority of it is real property since we are told in studies that is where most of the net worth is in late retirement and which seniors tend to hang on to as long as possible... even if they cannot pay the heat bill from their financial assets. But I think that what Kombat is referring to are the late boomers and those more likely not (ratio wise) to be in DB plans any more. The trend is certainly there for those currently in their 40s and 50s.ghariton wrote:Well, according to the 2006 Decima study quoted in the article I cited, baby boomers will leave inheritances totalling some $ 1 trillion. Some of that will be in the form of real estate, but not all of it.AltaRed wrote:I think it is a very small segment of our workers who would have amassed small fortunes in DC and RRSP plans and that this small segment wil not be recognizable in the overall scheme of things.
George
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Re: Boomertirement -- is this really a "crisis?"
Thanks Bruce.brucecohen wrote:Prof David Foot's segmentation in Boom Bust and Echo (based on birth rates):Koogie wrote:Not that it invalidates any of what you are saying but I think you have your dates/definitions mixed up. Those aren't the generally accepted timelines for those groups.parvus wrote:Probably not among late boomers (Gen-X, 1958-1965), perhaps among Gen-Y (1966-1980) doubtfully among millenials (1980-) who were stiffed in the job market. Unless, of course, there is massive immigration.
Boom: 1947-1966
(Gen X: 1960-1966)
Bust: 1967-1979
Baby Boom Echo: 1980-1995
Millennial: 1995+
I'm not that far off in my characterizations, it seems. I'm parsing rather loose media usage, which tranforms Gen-Y into Gen-X, and so forth -- which would have millenials as job-seekers now, which is clearly impossible since most haven't even achieved the age of majority.
Wovon man nicht sprechen kann, darüber muß man schweigen — a wit
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Re: Boomertirement -- is this really a "crisis?"
Further to the theme of Boomertirement was a post today by Donna Stevenson of Boomer Match To Business (her website is mentioned in the post ...worth seeing). I was deeply impressed with her experience and thoughtful description of how we are so different from the "quiet" retiring generation than preceded us ....in that Boomers want to re-invest, re-devise, re-generate their retirement. And here's what she said, in words far better than I could offer myself.... http://guaranteedincome4life.ca/resources/retire-going/
In my terms, it's all about choosing the Life you want, and ensuring wealth, family matters, and ongoing contribution (work or whatever) fall into place with this for us.
Cheers and good discussion everyone!
BW
In my terms, it's all about choosing the Life you want, and ensuring wealth, family matters, and ongoing contribution (work or whatever) fall into place with this for us.
Cheers and good discussion everyone!
BW
Re: Boomertirement -- is this really a "crisis?"
I think we can learn something from the Mexicans who refer to retirement as Jubilacion, something to be celebrated with great gusto. It has none of the negative connotations sometimes associated with our definition.
For the fun of it...Keith
Re: Boomertirement -- is this really a "crisis?"
Jubilation Couldn't agree more with them. Having a great time since retiring 2 years ago. Heading down to Florida next week with the dog. Wife following by plane with the cat. Yahoo "ROAD TRIP"
Re: Boomertirement -- is this really a "crisis?"
He/she will be doing their share of the driving, will they?Stan wrote:Heading down to Florida next week with the dog.
"Jubilacion" is the term used across Latin America, not just Mexico.
Reminds me of a story that was popular in the 1950s.
Hardworking American finally has made his pile and is relaxing on a South American beach. Everything is lovely, but he can't help but notice some young locals snoozing under the palm trees. He approaches one, who happens to speak some English, and asks him why he isn't at work. The man replies (I'll skip the caricatural accent): Because it's such a nice day. Much better to laze under the palms than to work.
But you have to work, says our hero.
And why is that, answers the beach bum?
Why, to become rich like me.
And why should I become rich like you?
Why, to retire, and live a life of ease, and do whatever you want.
And you have reached that goal?
Yes.
And what is it that you are doing with this freedom?
Why, visiting all sorts of places, like this one.
And sitting under the palms?
Why, yes.
Ah.
George
The juice is worth the squeeze
Re: Boomertirement -- is this really a "crisis?"
Sorry, forgot to identify that the dog is a Standarad Poodle.Heading down to Florida next week with the dog.
He/she will be doing their share of the driving, will they?
Cheers
Stan
Re: Boomertirement -- is this really a "crisis?"
Not necessarily statistically solid but may offer some insight into a trend.
Nearly a third of retired Canadians returning to work to pay bills: pollThe polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.
" A verbal contract isn't worth the paper it is written on " Samuel Goldwyn
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover
Re: Boomertirement -- is this really a "crisis?"
Thanks for that perspective. I know too many who have reached their golden years only to have regrets.ghariton wrote: "Jubilacion" is the term used across Latin America, not just Mexico.
Reminds me of a story that was popular in the 1950s.
Hardworking American finally has made his pile and is relaxing on a South American beach. Everything is lovely, but he can't help but notice some young locals snoozing under the palm trees. He approaches one, who happens to speak some English, and asks him why he isn't at work. The man replies (I'll skip the caricatural accent): Because it's such a nice day. Much better to laze under the palms than to work.
But you have to work, says our hero.
And why is that, answers the beach bum?
Why, to become rich like me.
And why should I become rich like you?
Why, to retire, and live a life of ease, and do whatever you want.
And you have reached that goal?
Yes.
And what is it that you are doing with this freedom?
Why, visiting all sorts of places, like this one.
And sitting under the palms?
Why, yes.
Ah.
George
Re: Boomertirement -- is this really a "crisis?"
Build wealth by investing in your health
I posted a link to the YouTube video by Dr. Mike Evans in 'Another Healthcare Thread'
I posted a link to the YouTube video by Dr. Mike Evans in 'Another Healthcare Thread'
" A verbal contract isn't worth the paper it is written on " Samuel Goldwyn
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover
"The light at the end of the tunnel may be a freight train coming your way" Metallica - No Leaf Clover