3 - Retirement Flashcards
What are the 2 main reasons which influence a person to retire?
1) Personal reasons
2) Social reasons
How can personal reasons influence a person to retire / what are the personal reasons which influence a person to retire?
- Their expected pension income
→ this may force someone to continue working even if they do not want to
→ i.e., people will continue working if they don’t have enough money in their pension to retire
→ this is financial insecurity - Early retirement incentives
→ some places will offer a buy-out to get people to retire - Loss of a job or health
→ If you are unhealthy, you may not be able to keep working - A spouse retiring
→ you may be inclined to also retire - Family responsibilities
→ caregiving roles for a spouse or parent
How can social reasons influence a person to retire / what are the social reasons which influence a person to retire?
- Mandatory retirement
→ we no longer have this in Canada (since 1986), but there are still the incentives - Better pensions at 65
→ those who retire early typically have higher paying jobs
→ if you work after 65, you lose a portion of benefits to taxes because you’re essentially making more
→ Sometimes work may be inflexible when you’re over 65 - Positive social attitudes towards retirement
What are the 3 main reasons people take early retirement?
1) People in poor health
- For example, 30% of people under 60 retire due to health reasons
- Poor health due to drinking, smoking, and obesity are the largest predictors
- High stress jobs also lead to early retirement
2) Women who retire for personal reasons
- Women often retire when their spouse retires
→ women tend to marry older men who retire first (cause older), and they like to retire with them
- They often retire to care for a spouse or family member
- p.ex: retiring for family responsibilities ranked third as a reason to retire for women, but wasn’t even ranked as a reason for men
3) Those who expect a good retirement income
- Self-employed workers tend to retire later than all other workers
- Public service can retire at 55 with a full pension (if you start working government at 25)
- people who work in the private sector stay on until at least 65, with most (64%) planning to work past 65
- Can opt to get your pensions early at a reduce rate
→ p.ex: government jobs typically allow you to retire earlier
Name the 4 types of income in retirement
1) Private income / investment / savings
2) Private pension plans
3) Public pension plans
4) Government transfers
Elaborate on private income / investments / savings as income in retirement.
- Includes employment, rent subsidies, tax exemptions, subsidies for purchases, registered pension plan (RRPs)
→ RRP: established by companies to have pensions for their employees - Most public sector (nurses, teachers, etc.) (but only ¼ private sector have registered pension plans)
→ those in the public sector have better benefits - Men and higher income individuals tend to benefit the most from these plans
→ men tend to work longer and get higher pay, which is why they’re able to contribute
Elaborate on private pension plans as income in retirement.
- Includes plans such as a registered retirement savings plan (RRSP)
→ RRSP: individual retirement plans that you can pay into - Allows you to put money away without paying taxes at that time
- Higher income people benefit most from these
→ taxes get taken out later when you withdraw the money
→ p.ex: if you’re older and retire at 60 (the age before typical retirement), you can still withdraw your pension, but you will be taxed for it and therefore receive less
→ the higher the income, the bigger the benefits in RRSPs
Elaborate on public pension plans as income in retirement.
- everyone automatically pays into the Canadian Pension Plan (CPP) and Quebec Pension Plan (QPP) when working
- Up to 5.95% of salary goes into CPP (employers match this amount)
→ the self-rate (this is the 5.9%) and the employer-rate
→ so overall, you have 11.8% of savings yearly
→ when you’re self-employed, you need to be putting away this amount - Does not go into an account for you, it pays the current retirees and when you retire the young people will be paying your pension
- the CPP goes with you when you change jobs, with CPP you can choose to retire early or later (early as 60 or as late as 70)
Elaborate on government transfers as income in retirement
- Includes old age security (OAS), Guaranteed Income Supplement (GIS), and the Allowance (ALW)
→ most people get OAS, have to be in Canada for 10 years to get it
→ designed for people in the lower income bracket
→ if you make over a certain amount yearly, you have to pay this OAS back (over 117 000)
→ people who have low income or no income also have GIS - Canadians qualify for OAS, GIS. Typically reserved for lower income adults, and ALW are for spouses or partners of GIS recipients
- Most used by women than men
- OAS has a maximum of 8616$, GIS has a maximum of 12 000$
- Low-income older adults receive 94% of their income from these methods
True or false: Non-European ethnic descent tends to earn lower retirement income.
True: p.ex: people from latin america or asia tend to retire later and have less chances for government transfers such as OAS and GIS
→ minorities have less chances of having occupational pension so they end up with lower income altogether, so they work much later in life to supplement their incomes
→ For this reason, recent immigrants tend to live with families, if they didn’t, their living arrangements would be 30% higher if not more
True or false: Older men have higher rates of living in poverty.
False: Older women have higher rates of living in poverty
→ Particularly those who husbands have died
→ because traditionally, men were the main breadwinners, so women often didn’t work, thus higher rates of poverty
Almost __% of windows live below the government’s cutoff for low income.
10%
What type of work is often used to ease a worker’s move to full retirement? Why is this?
Part-time work
→ Some work out of necessity (for money) and others do it to just stay active and maintain a sense of purpose
→ a lot of people who are forced to retire have difficulty shifting from full-time to doing nothing at all, so they’ll often work at another uni but part-time
True or false: Because of age discrimination, older adults are less likely to be hired despite their longer years of experience.
True: may show less physical exertion but are more reliable in the workforce; greater sense of loyalty and safety behaviors
→ some companies have adjusted their business models to accommodate older adults (office chairs that rise up and down, larger fonts on computers, etc.)
People’s adjustment to retirement evolves over time as a result of interactions between…
physical health, financial status, and the degree to which retirement was optional
