Nevada Retirement Planners

The issues are how local governments will pay to make up stock market losses, and how fast they must do so.

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This week, I had the pleasure of seeing my financial novel Findependence Day reviewed by Norman Goldman of Bookpleasures.com. His review — click here — also can be found here
at Amazon.com. (Montreal-based Goldman is a Top 500 book reviewer at
Amazon.com.) In addition, he conducted an interview which can be found here. For convenience and with his permission, I'm also publishing the whole interview here on my blog:

Norm:

Good day Jonathan and thanks for participating in our interview. How did you get started in writing? What keeps you going?

Jonathan: I've always been a writer. I attempted a mystery novel at age 8, titled The Mystery at Tamarac, handwritten in a lined notebook. I stopped when I got to the end of the notebook, much to the annoyance of my now 17-year old daughter. But I got waylaid by journalism and except for some youthful poems and short stories, didn't again attempt a novel till 2001. I hope to do more once I reach my own Findependence Day!

Norm:

What motivated you to write Findependence Day as a work of fiction?

Jonathan:

A year before I started it, I came up with the title, which was just a play on the American Independence Day [it's a trans-border romance set in the United States and Canada] and a contraction of Financial Independence. I later found out there was a Fargate film of the same name but didn't know it at the time. Originally I planned it to be non-fiction but doing it nights, weekends and vacation time would have been too much like my day job, so I reluctantly and finally went down a road I had long avoided because it had been done so much before – the Wealthy Barber financial fiction approach.

Norm:

What do you want your book to do? Entertain? Provoke thinking? As a follow up, is there a message that you want your readers to grasp?

Jonathan:

My employer, Canwest, has a mission statement that involves both informing and entertaining, so I'd say I tried to do that here. It's really a financial Harlequin's romance aimed at younger adults just starting marriage, home ownership and parenting; secondarily it's aimed at the children of the boomers, some of whom may still be in grade school. The message is simply that if the goal is financial independence, the way to achieve it is guerrilla frugality: saving the difference between income and expenditures and investing it wisely and tax efficiently.

Norm:

What was one of the most surprising things you learned in creating all of your books?

Jonathan:

I was never surprised they are a lot of work. After Krash! in 1999 (a misadventure about Y2K and the stock market that some might view as my fictional debut!) I decided to take a moratorium on book-writing on top of a full-time job. I turned down a bunch of proposals but ultimately it's always my own ideas that get me moving. The Wealthy Boomer was like that: I initially contemplated making it fiction (this was in 1998) but I chickened out and made it non-fiction.

Norm:

It is said that writers should write what they know. You clearly know financial planning and money management.  Were there any elements of the book that forced you to step out of your comfort zone, and if so, how did you approach this part of the writing?

Jonathan:

Sure. First, the deadline was ridiculous but I didn't need to do any research on financial matters. That part was already in my head and I had five certified financial planners who vetted the manuscript for accuracy. So the challenge was the fiction part: plot, setting, characterization, dialogue and especially description. I wanted a "real story" — not just a thin plot which plays second fiddle to the financial content. It's a balancing act: too much story and you lose those who just want the financial info; too many financial dumps and you lose the people that want a story.

Norm:

Do you feel that writers, regardless of genre owe something to readers, if not, why not, if so, why and what would that be?

Jonathan:

Sure, writers and readers are like yin and yang; you can't have one without the other. So the writer owes the reader his (or her) best whether it's a creative work or a work of research, or anything between. The reader is going to devote some time and often money to absorbing this work, which amounts to the "life energy" I mention in the book. If they expend it and are disappointed they did, it doesn't speak well to their ongoing relationship. Someone once said a good beginning helps sell today's book, but a good ending helps sell the next one. I think those that get to the end of Findependence Day are glad they stuck around for what one called a "Hollywood ending."

Norm:
What do you think of the new Internet market for writers?

Jonathan:

It's probably a golden age for new writers, not unlike the vast market for television and film that opened up with the 500-channel universe. The problem on the Internet is of course monetizing the writing: so many are giving it away for next to nothing on blogs or Twitter, including myself!

Norm:

Are you working on any other books/projects that you would like to share with us? (We would love to hear all about them!)

 
Jonathan:

I have some ideas for a sequel to Findependence Day but frankly, there's little point in me doing that until the first instalment has established itself. It's a crowded competitive landscape and things don't always happen instantly. But I'm encouraged by the words of David Chilton, who tells me his The Wealthy Barber didn't happen instantly after he wrote it in 1989: it took him two long years of promotion, publicity and public speaking throughout North America. So we're about half way through year one to make it known in Canada and hopefully in 2010 we'll make some headway in the United States. After all, it does begin in Chicago and ends in New York City!

Norm:

How can our readers find out more about you and your endeavors?

Jonathan:

I'm still a working journalist, employed by the National Post. Everything I do is on the web at www.financialpost.com and my Wealthy Boomer blog at www.wealthyboomer.ca, which is housed at the Post. Twice a week I also post the Wealthy Boomer video interview there. As you know, I'm also on Twitter as JonChevreau.

Norm:

Is there anything else you wish to add that we have not covered?

Jonathan:

Maybe the topic of financial literacy. You see various governments doing web-based financial literarcy projects like Investored.ca that strive to educate financial consumers; however, I think pop culture is a better medium for getting to young people that are so busy with their Facebooking and electronic messaging with their peers. Hopefully this little financial novel will find an audience with young people and the schools. An introductory personal finance course could use this novel to "hook" them, then  add a proper personal finance textbook to drill down further on the core concepts. I do include a two-page bibliography at the end of the novel, which is a good start, since it covers the many financial books I've bought, read and reviewed in the last two decades or so.

Norm:

Thanks once again and good luck with all of your future endeavors.

Jonathan:

Thank you, Norman, for the chance to spread the word.

 

Click Here To Read Norm's Review.

Click Here To Purchase Findependence Day

Added by Jon: The above link to Amazon may indicate they're temporarily out of stock. Financial Post readers can get a special discounted price directly via this link.

 –62–

Source The Wealthy Boomer : Retirement

ALBANY, N.Y. (AP) — New York state Comptroller Thomas DiNapoli says the state’s massive public pension fund lost more than 26 percent on its investments during a fiscal year marked by Wall Street’s meltdown and the recession.

Read more.

NEW YORK (Reuters) – Lee Iacocca, the car executive credited with saving Chrysler from bankruptcy in the 1980s, is to lose a big chunk of his pension and a guaranteed life-long company car due to the U.S. automaker’s bankruptcy filing two decades later.

Read more.

ATLANTA (AP) — Eligible Delta Air Lines Inc. pilots who elect to retire as part of an incentive program designed to reduce the number of pilots at the world’s largest airline operator will receive up to nine months of severance pay and other benefits, according to the union.

Read more.

Today's column in the paper is about the CPP changes announced Tuesday by the Department of Finance: Hello, Freedom 70.

It's always difficult to cram multiple interviews into a space of 700 words, especially when you're talking to three actuaries, who need a bit more space to articulate their mathematically nuanced views.  At the end of this blog, I attach a long analysis by Burlington actuary Tom Walker, who also happens to be this week's interview subject for the Wealthy Boomer interview.

We'll start off with some of my interview with Mercer actuary and consultant Malcolm Hamilton, pictured.

To start with, Hamilton says someone who wants to get early CPP at 60 when the full scale-back occurs in 2016 will actually experience a benefit reduction of less than 10% (not the 20% I initially suggested in Tuesday's blog). Up till now, by taking CPP early at age 60 you would have got 70% of what you'd have got by waiting till 65; under the new rules, taking it at age 60 in 2016 results in 64% of what you'd get by waiting till 65;  so the precise "pay cut" is 8% according to Ian Markham, whose views are articulated below. And, as I do say in the column, this is phased in gradually so those who turn 60 before 2016 will get relatively less of a haircut on early benefits.

"If you look at this objectively, it's not a huge change," Hamilton told me in an interview, "I keep reading that it's a monumental change but that's a flagrant exageration of what's going on. It's directionally important but not terribly consequential. It's more important as a signal."

As things stood, the existing benefit reduction factors tipped the balance in favor of Early Retirement but only marginally. Taking 70% of benefits at age 60 was a slight advantage to individuals and imposed a slight increase in costs to the CPP system as a whole.  "All they've done is try to put it to neutral," Hamilton said, "Neutral to the plan, not necessarily neutral to the individual."

Does Ottawa want baby boomers to stay harnessed in workforce? 

I asked him if the government was essentially trying to keep the baby boomers "in harness," shackled to their jobs till age 70. "Yes but to change people's behaviour is going to require something more dramatic than this. If you put a dollar measure on the extra incentives to keep working this is very small."

A 60 year old contemplating taking early CPP now has two quite different decisions to make. If they're out of work and can't find a job the decision is already made: somewhat like the Americans mentioned in this blog earlier this week who are taking  Social Security at 62 because they've been laid off and need the money.

But those who hit age 60 who are still working have a different decision. "In the old days if you wanted to continue working there was no choice," Hamilton said, "You just continued and did not draw CPP."

Double-dipping opportunity for those working after 60? 

But under the new regime, a 60 year old who plans to work has a choice: he or she can ask for CPP benefits to commence even though they're continuing to work. If they do that, they will continue  to contribute to the CPP and each year will get an increase in benefits to reflect that decision. "It's a complicated concept," Hamilton explains, "If I retire at 65, I can work till then, then get unreduced CPP or you could at 60 decide to start receiving the CPP benefits reduced by 36% and keep making CPP contributions because you're still working. A year later they will pay you extra benefits for the years worked after age 60."

I suggest the country will need to keep the nation's actuaries in harness just to help Canadians figure out their CPP benefits. "It needs to be automated," Hamilton answers, "There are too many numbers and data. It's all in the CPP data base … But many people will be comforted by the story that if there's no reason to think you're different than average, then there's no reason to think it's important to draw CPP early or not … If you want the extra cash, draw it. For the normal person, it's a wash."

But the early retirement decision involves much more than just CPP: there's the disappearance of Defined Benefit pension plans from the workforce and the losses sustained in the stock market by the Defined Contribution plans that are displacing DB plans. (And for that matter, losses in RRSPs and RRIFs). DB plans have always been designed to reward workers the longer they stay. Those with DC plans and RRSPs also have an incentive to delay Retirement: the longer they wait, the more portfolios can grow; second, once they do retire, their portfolios won't have to fund as many years of withdrawals.

 
Benefit enhancements for those who delay CPP till late 60s or 70 a good thing 

Sweetening CPP benefits for those who choose to keep working between age 65 and 70 is also a good thing, Hamilton says. "I suspect many working after 65 do so for a reason. They've lost savings and can't afford to retire. To the extent they're in that situation, if you make their load easier it's probably a good thing."

Elaborating on the message Finance is sending to the population, Hamilton said signalling they want to treat early retirement fairly and not subsidize those who take it early is an important message. It would be even more important a sea change if the federal government announced it was changing the pension plan covering its own employees and removed its very expensive incentives to retire before 60.

"Saying we will make a minor directional change to CPP with absolutely no change to their own arrangement is not a sea change, it's more of the same hypocrisy," Hamilton concluded, "I've always said I'll know they're serious about early retirement when they start working on their own plan. Based on that standard, there's no sea change here."

Ian Markham, director of pension innovation, Watson Wyatt Canada

Ian Markham says the changes are evidence the government is listening to what's happening in the economy. Adding a year to the drop-out period [low-income years that don't "count" in computing CPP benefits] makes sense because 2008 and 2009 may be bad years for many. Markham also likes the fact the current requirement to stop working or significantly reduce earnings before commencing CPP benefits will be removed.

"It was always a bit of a sham that if you want to start Early Retirement you had to stop work, then get another job. This recognizes reality. The message here seems to be that things have changed, maybe just temporarily but maybe not. It's better to assume we will be working longer and provide a reward for that. I'm quite pleased."

it was well recognized in the pension industry that the Early Retirement "subsidy" was too much, Markham says.  For those with lowish incomes below the average wage, CPP represents an important part of their income so these changes "may well influence their behaviour. The message is very clear for them: keep working and that's good."

Deferring Retirement preserves the current 9.9% CPP contribution rate 

For those who don't need the income, the message is you may have to keep working, whether it's the product of the current economy or the fact that people are living longer. "It's better to protect the [9.9%] CPP contribution rate so they don't have to raise it later. One way is to defer retirement." 

Markham is unphased by the prospect of deferring retirement. "For those with higher incomes, CPP is not as an important component of retirement. People are going to be working longer and should get used to it. I don't mind that because we are all living longer. The reality is we may end up facing higher contribution rates. How do we deal with that? Do we as a society want to face higher contribution rates for CPP because we're living longer or do we want to cap the contribution rate and start receiving benefits later?"

Asked about intergenerational inequities, Markham says those who began to receive CPP in 1976 did the best.  "For today's young people just starting to contribute, the worry is they won't get much of a rate of return. Thank heavens interest rates came down, which means the won't get much of a return on investments."

Young workers can count on CPP being there when it's their turn to retire

Markham doesn't think the young are getting a raw deal, though that might be the case if interest rates rose again. It's true many young people aren't counting on getting benefits but that's because not enough financial professionals are saying it's a decent pension. "The government said for the next 75 years even with the market crash we can still expect to receive the benefits we've been promised without having to raise the contribution rate, as long as they're careful about the ratio of benefits to contributions."

 "Today's young people should count on the CPP being there," Markham said, "It's very well run. The CPP is the envy of the world. We started to [make it viable] in time though we could have done so five years earlier. But we did it and most other countries have not managed to."

Tom Walker, CFP and semi-retired actuary, on the maturing of the CPP

Finally, Tom Walker — formerly of Buck Consultants — provides an insightful perspective on the CPP changes in light of the fact the system has almost "matured," relative to its inception in 1966. We ran two video interviews with Tom this week: the second, on whether employer pensions should be viewed as deferred income or reward for long service, ran today.

The rest of this blog is in Tom's words, which I've italicized to make clear his authorship. The subheadings were added by me.

By Tom Walker, FSA, FCIA, CFP

The CPP changes announced on May 25th reflect a necessary adjustment as the CPP approaches maturity.  I will focus on the early retirement changes in this commentary.

People born in 1948 (the 1948ers) constitute the first demographic that does not benefit from a shortened contribution period prior to qualifying for retirement benefits under the CPP.  The CPP started in 1966, the year the 1948ers turned 18. In 2008 the 1948ers turned 60. This made 2008 a bellwether year for the CPP.  It was the first year in which an individual reaching the early retirement age of 60 had contributed from age 18 until their early retirement date.  For every year from 1966 up to and including 2007 any individual attaining age 60 contributed for less than the maximum 42 years from age 18 to age 60.  For example someone retiring in 1991 at age 60 would only have contributed for 25 years and at much lower rates than are in place today.

2013 will be bellwether year for the fully mature CPP 

The year 2009 is the first year in which an individual qualifying for early retirement at age 60 will in fact have contributed for a shorter period of time than a person who attains 65 in the same year.  The year 2013 will be another bellwether year for the CPP as the 1948ers will attain age 65. 2013 will be the first year in which an individual attaining age 65 will have contributed over the entire 47 years from age 18 to age 65. For every year from 1966, up to and including 2012, any individual attaining age 65 would have contributed for less than the 47 years from age 18 to age 65. 2013 will also be the first year in which an individual turning age 65 will have contributed to the CPP for 5 years longer than an individual turning 60 in the same year.

Any individual over age 18 when the CPP was established (i.e. born in 1947 or earlier) has benefited from a shorter contribution period to qualify for CPP benefits.  Any individual over age 18 as of 2003 (the year CPP contributions hit their current level) has benefitted from up to 37 years of lower contribution rates. 

Until now the earlier that an individual qualified for early retirement or normal retirement under the CPP the greater the value of the benefit that they have received relative to the contributions made over their career.  The current early retirement reduction of 30% at age 60 does not recognize the shorter contribution period for a person at age 60 compared to a person, born the same year, who contributes until age 65.  This is due to the 30% reduction being applied to the age 65 pension that the individual would have attained had he continued to work with his annual income, and contributions following  the exact same pattern, from age 60 to age 65, as they did from age 18 to age 60. 

Post-65 CPP enhancements richer than under-65 reductions 

Under the proposed changes the early retirement reduction factor has been increased from 0.5% to 0.6% for each month that the pension is taken prior to age 65 (phased in over 5 years – 0.52% in 2012, 0.54% in 2013, 0.56% in 2014, 0.58% in 2015, 0.60% in 2016 and thereafter).   Furthermore, those who defer retirement beyond age 65 will benefit from a more generous increase in their delayed pension from 0.5% to 0.7% for each month that the pension is delayed  after age 65 (phased in over 3 years – 0.57% in 2011, 0.64% in 2012, 0.70% in 2013 and thereafter).  The positive impact on pensioners of the more generous increase due to delayed retirement takes full effect before the full impact of increased reductions hits early retirees.

Unfortunately those who will turn 60 from 2012 to 2015 will lose a portion of the current early retirement subsidy. Those who turn 60 after 2015 will lose the entire early retirement subsidy A major, and important, part of the change to the early retirement provision is that individuals who work after taking an early retirement pension can accrue additional CPP benefits after their early retirement.  If they are under age 65 when they return to work they must contribute.   After age 65 they do not have to contribute but may elect to do so. 

Necessary steps to keep CPP viable 

The current pension benefits of those (e.g. me!) who have already started to collect an early CPP pension will not be affected.  However if a person who retired early prior to the proposed changes is working after the changes are implemented, he or she will be required to contribute prior to age 65 and will have the option to contribute after age 65.  The additional contributions will result in additional benefits which are not currently available.

The increase in both the early retirement reduction and the delayed retirement augmentation are necessary steps to increase the fairness and sustainability of the CPP as the plan matures.  Intergenerational transfers are present, and significant, within the CPP. These were necessary to build the CPP to where it is today.  Over time the impact of the costs carried forward from prior generations will be reduced.  The CPP will be reaching what I would call its “maturity year” in 2013 (like a person reaching age 18?).  From this maturity year forward I am very confident that the CPP will continue to be an example to the rest of the world of a well designed and sustainable public pension plan.

– 70 — [if you really want to max out CPP benefits]
 

Source The Wealthy Boomer : Retirement

 

Kalim Khan, who has been unemployed for one year, looks through job listings at a Nevada JobConnect career centre in Las Vegas. Claims for early retirement have jumped 25% in the United States, leading analysts to speculate that many of the extra claims are coming from laid-off workers who need the cash. Ronda Churchill/Bloomberg News
 

While several recent surveys have suggested the battered stock market and economy have caused many aging baby boomers to postpone their planned retirements, the latest statistics out of Washington suggest the reverse may be happening. As this piece that ran in the Los Angeles Times this weekend indicates, the Social Security Administration is reporting a "major surge" in early retirement claims.

Claims have jumped 25% ahead of the previous fiscal year (they begin on October 1st), leading analysts to speculate that  many of the extra claims are coming from laid-off workers who need the cash. In both the U.S. and Canada's CPP system, it's possible to take early but reduced payments. In the U.S., you normally take early Social Security benefits at age 62, but the payments will be 25% less than if workers waited till the normal age of 66. In Canada, the normal age to collect the Canada Pension Plan (and also Old Age Security) is 65, but you can collect CPP as early as age 60, but with benefits reduced by 30% (6% less for each year you take it before 65).

Ottawa dangles carrot for those who delay taking CPP

That was the case until this week. But as Paul Vieira reports in today's paper, Ottawa plans to revise CPP rules slightly to make it easier to draw on CPP while continuing to work.  As of 2012, the technical rule that required Canadians to quit their jobs and remain out of work for two months will be dropped. But under the new plan, those opting to take early CPP at age 60 would see a benefits reduction of 36% rather than the previous 30%.  Ottawa is also sweetening the deal for delaying CPP benefits: by waiting till age 70 to draw them, benefits would improve by 42% compared to the current 30%.

Clearly, the Canadian government would prefer that we weary boomers stay in harness till we drop. If you're 57 today and were planning to leave the workforce at 60, three years hence, you just got a 6% cut in pay. It's not clear what we're getting back in compensation, if anything. As far as I can see, the only real tradeoff was ending the requirement to remain out of work for two consecutive months in order to collect CPP. Either way, the net is more work and less retirement.

There's a discussion of the implications here and the Canadian Capitalist blog also has an update on these major CPP developments.

U.S. braces for second wave of early retirees when unemployment benefits exhausted 

Meanwhile, in the U.S., social security's chief actuary Stephen Goss suggested another wave of older workers may opt for early retirement when they exhaust unemployment benefits later this year or early in 2010.

All this flies in the face of surveys on both sides of the border. In Canada, Desjardins Financial Security found boomers on average planned to postpone retirement by almost six years because of stock-market losses. In the U.S. a December poll by CareerBuilder found 60% of American workers older than 60 planned to postpone retirement.

A bird in the hand worth two in the bush? 

Some financial planners argue it makes sense to take early benefits, even if reduced, particularly if you can invest the benefits and grow your nestegg. Those five years of extra benefits can add up to a hefty sum and it's estimated that the "breakeven point" where the extra payments gained by postponement surpasses the foregone early cheques doesn't 't occur until one's late 70s or early 80s. So if you don't expect to live that long, it makes sense to go early.

Another consideration is whether the plans will still be around by the time you plan to collect at the normal age. I'd call this the "a bird in the hand is worth two in the bush" argument.

The CPP is considered in solid shape since contribution rates were hiked in the 1990s although like most pensions the part of CPP that's in publicly traded securities suffered losses over the past year's market meltdown.

U.S. social security is considered to be on somewhat shaky ground, a thesis explored in the 2004 book, The Coming Generational Storm. In it, Scott Burns and Laurence Kotlikoff warned that "Social Security's long-run finances are precisely three times worse than the public has been led to believe." To fix it would require raising payroll taxes by almost 30%, the authors warned.

Clearly, those out of work and confronted with a financial crunch don't have the luxury of maximizing their financial behaviour for the long term. Even where Unemployment Benefits are generous — a topic being debated currently by Canadian politicians — eventually they run out. For those without an emergency savings cushion or the imminent prospect of reemployment, it's entirely logical to take the governments' early retirement benefits if they're old enough to qualify.

Desperate times call for desperate measures.  

 

 

–61–
 

 

Source The Wealthy Boomer : Retirement

 

Kalim Khan, who has been unemployed for one year, looks through job listings at a Nevada JobConnect career centre in Las Vegas. Claims for early retirement have jumped 25% in the United States, leading analysts to speculate that many of the extra claims are coming from laid-off workers who need the cash. Ronda Churchill/Bloomberg News
 

While several recent surveys have suggested the battered stock market and economy have caused many aging baby boomers to postpone their planned retirements, the latest statistics out of Washington suggest the reverse may be happening. As this piece that ran in the Los Angeles Times this weekend indicates, the Social Security Administration is reporting a "major surge" in early retirement claims.

Claims have jumped 25% ahead of the previous fiscal year (they begin on October 1st), leading analysts to speculate that  many of the extra claims are coming from laid-off workers who need the cash. In both the U.S. and Canada's CPP system, it's possible to take early but reduced payments. In the U.S., you normally take early Social Security benefits at age 62, but the payments will be 25% less than if workers waited till the normal age of 66. In Canada, the normal age to collect the Canada Pension Plan (and also Old Age Security) is 65, but you can collect CPP as early as age 60, but with benefits reduced by 30% (6% less for each year you take it before 65).

Ottawa angles carrot for those who delay taking CPP

That was the case until this week. But as Paul Vieira reports in today's paper, Ottawa plans to revise CPP rules slightly to make it easier to draw on CPP while continuing to work.  As of 2012, the technical rule that required Canadians to quit their jobs and remain out of work for two months will be dropped. But under the new plan, those opting to take early CPP at age 60 would see a benefits reduction of 36% rather than the previous 30%.  Ottawa is also sweetening the deal for delaying CPP benefits: by waiting till age 70 to draw them, benefits would improve by 42% compared to the current 30%.

Social security's chief actuary Stephen Goss suggested another wave of older workers may opt for early retirement when they exhaust unemployment benefits later this year or early in 2010.

All this flies in the face of surveys on both sides of the border. In Canada, Desjardins Financial Security found boomers on average planned to postpone retirement by almost six years because of stock-market losses. In the U.S. a December poll by CareerBuilder found 60% of American workers older than 60 planned to postpone retirement.

A bird in the hand worth two in the bush? 

Some financial planners argue it makes sense to take early benefits anyway, even if reduced, particularly if you can invest the benefits and grow your nestegg. Those five years of extra benefits can add up to a hefty sum and it's estimated that the "breakeven point" where the extra payments gained by postponement surpasses the foregone early cheques doesn't 't occur until one's late 70s or early 80s. So if you don't expect to live that long, it makes sense to go early.

Another consideration is whether the plans will still be around by the time you plan to collect at the normal age. I'd call this the "a bird in the hand is worth two in the bush" argument.

The CPP is considered in solid shape since contribution rates were hiked in the 1990s although like most pensions the part of CPP that's in publicly traded securities suffered losses over the past year's market meltdown.

U.S. social security is considered to be on somewhat shaky ground, a thesis explored in the 2004 book, The Coming Generational Storm. In it, Scott Burns and Laurence Kotlikoff warned that "Social Security's long-run finances are precisely three times worse than the public has been led to believe." To fix it would require raising payroll taxes by almost 30%, the authors warned.

Clearly, those out of work and confronted with a financial crunch don't have the luxury of maximizing their financial behaviour for the long term. Even where Unemployment Benefits are generous — a topic being debated currently by Canadian politicians — eventually they run out. For those without an emergency savings cushion or the imminent prospect of reemployment, it's entirely logical to take the governments' early retirement benefits if they're old enough to qualify.

Desperate times call for desperate measures.  

Questrade Panel on social networking and investing

I'm on a panel discussing Twitter and investing today at 2 pm, along with Frugal Trader from the Canadian Money Forum. Host is BNN's Michael Hainsworth. Details here. The session is titled "I invest, therefore I tweet." It's a live web-based event so can be viewed online from anywhere.

Indeed, I picked up today's item from a weekend of "twittering" during dull stretches of the NHL playoffs. I tweet as JonChevreau. You can find all my "tweets" (or updates) here.  

 

–61–
 

 

Source The Wealthy Boomer : Retirement

At 2 pm (EST) today, I'll be one of three panel members on a live webcast sponsored by Questrade. The host is BNN's Michael Hainsworth. Other guests are Frugal Trader, well known on the Canadian Money Forum, and options specialist Sam Seiden.

While physically located at Yonge & Finch in Toronto, anyone with Internet access will be able to participate in the web cast. Details here.
  
All of us are on Twitter regularly, although I'm a relative newcomer, having only joined in February. Still, I've learned a few things about updates, retweeting and the fine balancing act of following people and being followed. There are basically three dynamics and Twitter is mostly based on "reciprocal" following. However, there will always be people you follow who don't follow you back, and conversely, some who follow you who you choose not to follow back.

It's not always logical: I've seen people on Twitter with hundreds or even thousands of followers who never made a single update. This occurs because of indiscriminate automatic following: there are many automated systems out there that play the numbers game but appear to have no discrimination as to quality of updates.  

How valuable all this is to investors will hopefully be revealed during the panel session. I'd guess it's another version of GIGO, or Garbage In, Garbage Out. If you follow quality people, it should help. If all you follow are self-promoters and network marketers (their numbers are legion on Twitter), it's dubious whether Twitter will help you invest and it may even hurt.  

–61– 

Source The Wealthy Boomer : Retirement

Three experts answer readers questions from recent college graduates and their parents.

Read more.