That is the kind of plan in which the employer guarantees the worker a set monthly benefit for life. They are increasingly scarce except for small closely held corporations.
The same rules apply for small closely held businesses as for large corporations.
These plans can be great tools for independent professionals and small business owners. But if you have thousands of employees, DB plans are expensive and risky.
The company is legally obligated to pay the benefits at whatever the cost turns out to be, which is hard to predict.
The advantage is you can use some hopeful accounting to set aside less cash now and deal with the benefit problems later. The problem is “later” comes faster than you would like, and procrastination can be a bitch.
That Brings Us to the Lesson for Today
In October 7, General Electric (GE) announced several changes to its defined benefit pension plans. Among them:
Some 20,000 current employees who still have a legacy-defined benefit plan will see their benefits frozen as of January 2021. After then, they will accrue no further benefits and make no more contributions. The company will instead offer them matching payments in its 401(k) plan.
About 100,000 former GE employees who earned benefits but haven’t yet started receiving them will be offered a one-time, lump sum payment instead. This presents employees with a very interesting proposition. Almost exactly like a Nash equilibrium. More below…
The first part of the announcement is growing standard. But the second part is more interesting, and that’s where I want to focus.
Suppose you are one of the ex-GE workers who earned benefits. As of now, GE has promised to give you some monthly payment when you retire. Say it’s $1,000 a month.
What is the present value of that promised income stream? It depends on your life expectancy, inflation, interest rates and other factors. You can calculate it, though. Say it is $200,000.
Is GE offering to write you a generous check for $200,000? No. We know this because GE’s press release says:
Company funds will not be used to make the lump sum distributions. All distributions will be made from existing pension plan assets in the GE Pension Trust. The company does not expect the plan’s funded status to decrease as a result of this offer. At year-end 2018, the plan’s funded ratio was 80 percent (GAAP).
So GE is not offering to give away its own money, or to take it from other workers. It is simply offering ex-employees their own benefits earlier than planned. But under what assumptions? And how much? The press release didn’t say.
If that’s you, should you take the offer? It’s not an easy call because you are making a bet on the viability of General Electric.
When GE says its plan is 80% funded under GAAP, it necessarily makes an assumption about the plan’s future investment returns.
I dug around their 2018 annual report and found the “expected rate of return” was 8.50% as recently as 2009, when they dropped it to 8.00%, then 7.50% in 2014, to now 6.75%.
So over a decade they went from staggeringly unrealistic down to seriously unrealistic. They still assume that every dollar in their pension fund will grow to almost $4 in 20 years.
That means GE’s offered amounts will probably be too low, because they’ll base their offers on that expected return.
GE hires lots of engineers and other number-oriented people who will see this. Still, I doubt GE will offer more because doing so would compromise their entire corporate viability, as we’ll see in a minute.
GE has $92 billion in pension liabilities offset by roughly $70 billion in assets, plus the roughly $5 billion they’re going to “pre-fund.”
But that is based on 6.75% annual return. Which roughly assumes that in 20 years one dollar will almost quadruple.
What if you assume a 3.5% return? Then you are roughly looking at $2, which would mean the pension plan is underfunded by over $100 billion—and that’s being generous.
GE’s current market cap is less than $75 billion, meaning that technically the pension plan owns General Electric.
This is why GE and other corporations, not to mention state and local pension plans, can’t adopt realistic return assumptions. They would have to start considering bankruptcy.
If GE were to assume 3.5% to 4% future returns, which might still be aggressive in a zero-interest-rate world, they would have to immediately book pension debt that might be larger than their market cap.
GE chair and CEO Larry Culp only took over in October 2018.
We have mutual friends who have nothing but extraordinarily good things to say about him. He is clearly trying to both do the right thing for employees and clean up the balance sheet.
He was dealt a very ugly hand before he even got in the game.
GE needs an additional $5 billion per year minimum just to stave off the pension demon. That won’t make shareholders happy, but Culp is now in the business of survival, not happiness.
That is why GE wants to buy out its defined benefit plan beneficiaries. Right now, the company is on the wrong side of math.
It doesn’t have anything like Hussman’s 31X the benefits it is obligated to pay. Nor do many other plans, both public and private. Nor does Social Security.
To be clear, I think GE will survive. Its businesses generate good revenue and it owns valuable assets. The company can muddle through by gradually bringing down the expected returns and buying out as many DB beneficiaries as possible. But it won’t be fun.
Pension promises are really debt by another name. The numbers are staggering even when you understate them. We never see honest accounting on this because it would make too many heads melt.
If I am a GE employee who is offered a buyout? I might seriously consider taking it because I could then define my own risk and, with my smaller amount, take advantage of investments unavailable to a $75 billion plan.
I predict an unprecedented crisis that will lead to the biggest wipeout of wealth in history. And most investors are completely unaware of the pressure building right now. Learn more here.
I am a financial writer, publisher, and New York Times bestselling-author. Each week, nearly a million readers around the world receive my Thoughts From the Frontline free investment newsletter. My most recent book is Code Red: How to Protect Your Savings from the Coming Crisis. I appear regularly on CNBC and Bloomberg TV. I’m also Chairman of Mauldin Economics, a research group that provides monthly analysis and recommendations to thousands of readers around the world. I was previously CEO of the American Bureau of Economic Research. Today I am President of the investment advisory firm Millennium Wave Advisors, LLC. I am also president and registered principal of Millennium Wave Securities, LLC a FINRA and SIPC registered broker dealer. When I’m not traveling to speak at conferences and events, I live in Dallas, TX. I’m also the proud father of seven children.
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What makes people happy in retirement? That’s the question Michael Finke has been researching for many years now. He’s the chief academic officer of the American College of Financial Services, and was one of 16 experts who spoke on at TheStreet’s Retirement, Taxes, and Income Strategies symposium held recently in New York.
But first a little background. Finke has been researching the question of what makes people happy in retirement because he wants to know to what extent does what people do with their money make them happy in retirement. “Is it better if they have a lump sum? Is it better if they have a pension, or some kind of annuitized income?”
And what he found was this: There seems to be three pillars of happiness in retirement. The first pillar is money, which he says is good news for those of who are actually saving for retirement. “You are happier if you have more money,” Finke said. “So money is a pillar.”
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And it shouldn’t be any surprise, he said, that health is also a pillar of happiness. “You can have all the money in the world, but if you’re not healthy, you’re not actually gonna enjoy your retirement,” Finke said.
But most of his newest research is on social well-being. For instance, the extent to which you have good relationships with your spouse is is one of the strongest predictors of happiness in retirement. “So make sure you invest in that as much as you’re investing in your 401(k),” Finke said.
The other predictors of happiness in retirement are, according to Finke, friendships and the depth of friendships and the number of friendships that you have with other people. “And even when we look at spending, what we see is that social spending is what really makes people happy,” he said.
Spending money on all sorts of other stuff that we think might make us happy in retirement doesn’t really make us that happy. “It is social spending that makes us happy,” Finke said.
So that’s the foundation of his research in life satisfaction in retirement. “You have to have all three of those if you’re going to be satisfied, and all of them are an investment,” said Finke.
What is an investment in retirement? According to Finke, an investment is anything that requires a sacrifice during your working years in order to build value. “When you save for retirement, it means that you’re living a little bit less well,” he said. “You’re setting money aside that you could have spent today, and you’re (going to) spend that money in retirement.”
Health is an investment, too, said Finke who recalled his early days as a food consumption researcher. “The whole reason I got into finance was because I took a doctoral class in investments because I wanted to understand investments theory, but my theory was that the same thing that motivated people to save money for retirement is the thing that motivated them to engage in healthy behaviors like eating better or exercising, and so that’s an investment in your future as well,” he said.
Relationships are an investment as well and it takes ongoing investment and time and resources to be able to maintain those friendships “so that you can actually draw from them in retirement,” said Finke.
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And if you haven’t made those investments — and men are especially bad at making investments in friendships — you’re not going to be as happy in retirement, he said.
Women, by contrast, invest more. “Women have more deep relationships than men do by the time they get to retirement,” he said. And that, said Finke, actually creates a big issue because very often women have friends outside of the relationship, and they want to spend time maintaining that investment with their friends.
A man’s social circle, by contrast, is at work. “And by the time they retire, they’re relying more on their spouse,” Finke said. “In an opposite-sex couple, they’re relying on their spouse for that, to spend time with them, to go on vacation with them and have lunch with them, and sometimes that creates a bit of friction in retirement.”
Finke also noted that married retirees, in general, are happier, but the happiest group is women who are newly divorced between the ages of 60 and 65. “That’s the happiest group,” he said.
Sources differ, but the story remains the same. According to a 2018 study by Northwestern Mutual, 21% of Americans have no retirement savings and an additional 10% have less than $5,000 in savings. A third of Baby Boomers currently in, or approaching, retirement age have between nothing and $25,000 set aside.
The Economic Policy Institute (EPI) paints an even bleaker picture. Their data from 2013 reports that “nearly half of families have no retirement account savings at all.” For most age groups, the group found, “median account balances in 2013 were less than half their pre-recession peak and lower than at the start of the new millennium.”
The EPI further found these numbers even worse for millennials. Nearly six in 10 have no retirement savings whatsoever.
But financial experts advise that the average 65 year old have between $1 million and $1.5 million set aside for retirement.
What Is the Average Retirement Account?
For workers who have some savings, the amounts differ (appropriately) by generation. The older you are, the more you will have set aside. However there are two ways to present this data, and we’ll use both.
Workers With Savings
Following are the mean and median retirement accounts for people who have one. That is to say, this data only shows what a representative account looks like without factoring in figures for accounts that don’t exist. This data comes per the Federal Reserve’s Survey of Consumer Finances. (Numbers rounded to the nearest hundred.)
• Under age 35:
Average retirement account: $32,500
Median retirement account: $12,300
• Age 35 – 44:
Average retirement account: $100,000
Median retirement account: $37,000
• Age 45 – 55:
Average retirement account: $215,800
Median retirement account: $82,600
• Age 55 – 64:
Average retirement account: $374,000
Median retirement account: $120,000
• Age 65 – 74:
Average retirement account: $358,000
Median retirement account: $126,000
For households older than 65 years, retirement accounts begin to decline as these individuals leave the workforce and begin spending their savings.
Including Workers Without Savings
When accounting for people who have no retirement savings the picture looks considerably worse. Following are the median retirement accounts when including the figures for people with no retirement savings. The following do not include mean retirement accounts, as this would be statistically less informative than median data.
• Age 32 – 37: $480
• Age 38 – 43: $4,200
• Age 44 – 49: $6,200
• Age 50 – 55: $8,000
• Age 56 – 61: $17,000
How Much Should You Have Saved For Retirement?
So that’s how much people have saved for retirement, or more often don’t. Now for the more useful question: How much should you have saved for retirement?
The truth is that there’s no hard and fast rule. It varies widely by your age, standard of living and (perhaps most importantly) location. Someone who rents an apartment in San Francisco needs a whole heck of a lot more set aside than a homeowner in the Upper Peninsula of Michigan.
The rule of thumb is to estimate by income. Decide the income you want to live on once you retire, then picture your life as a series of benchmarks set by age. At each age you want a multiple of this retirement income saved up. Your goal is to have 10 to 11 times your desired income in savings by retirement.
• By age 30: between half and the desired income in savings
• By age 35: between the desired amount and double the desired income in savings
• By age 40: between double and triple the desired income in savings
• By age 45: between triple and quadruple the desired income in savings
• By age 50: between five times and six times desired income in savings
• By age 55: between six times and seven times desired income in savings
• By age 60: between seven times and nine times desired income in savings
• By age 65: between eight times and 11 times desired income in savings
So, if you earn $50,000 per year, by age 40 you will want to have between $100,000 and $150,000 in retirement savings set aside. The formula grows later in life for two reasons. First, as your savings accumulate they will grow faster. Second, as you approach retirement it is often wise to accelerate your savings plan.
What You Should Do Next for Your Retirement Savings
Retirement is approaching a crisis. In the coming decades millions of Americans will get too old to continue working without the means to stop. Millennials, crippled by debt from graduation, will turn this crisis into a catastrophe in about 40 years. And Social Security, designed to prevent exactly this problem, covers less than half of an average retiree’s costs of living.
It’s beyond the scope of this article to discuss exactly how this happened, but if you’re one of the many people who have fallen behind on retirement savings, don’t panic. There’s plenty you can do. But… it might not necessarily be easy.
The key is to think about retirement savings like a debt. This is money you owe to yourself and it charges reverse interest. Every day you go without adding money to your retirement account is a day you lose investment income. That’s money that you’ll need someday and won’t have.
Next, take stock of where you are. How much will you want to live on in retirement and how much do you have saved today? Use our chart above. That will tell you how far behind you are compared to where you need to be. Are you a 40 year old with $25,000 in savings who will want to live on $50,000 per year in retirement? Then you’ve got $75,000 you need to make up for.
Now, begin catching up. Chip away at that debt every week and every month. Pay into your 401k and IRA the same way you would whittle down a credit card. By thinking about it this way, as a specific goal, you can take away some of the fear of saving for retirement and turn it into an achievable (if large) amount. It’s not just some big, black hole you can never fill. It’s a number, and numbers can go down.
It won’t necessarily be fun. You might have to cut back on luxuries or take on some extra work, but even if you start late in life you can catch up on your retirement.
Want to be happy in retirement? Then cultivate relationships and spend more money on leisure activities—at least that’s what new academic research (as well as common sense) suggests.
To help you with the leisure part, Forbes presents its 2019 list of 25 great places to pursue seven retirement passions: arts, fine dining, lifelong learning, volunteering, outdoor activities on water, outdoor activities on land and (in its own category) golf.
Most are recommended for multiple passions and two—Seattle and Austin, Texas—excel in all seven categories. Our picks are spread across 21 states in all four continental time zones.
While our flagship Best Places To Retire list highlights locations that offer the best retirement value for the buck, our passions list doesn’t disqualify places simply because they’ve got high costs or taxes. Athens, Georgia, our most affordable passions pick, has a median home price of just $178,000, while San Francisco, our most expensive, has a median home price of $1.36 million. Although high costs (or high taxes) won’t keep a city from making this new list, we do take into account such practical quality of life factors as air quality, crime, doctor availability and how walkable and bikeable a city is. You can read more about our selection method here.
Fine dining 🍴
Lifelong learning 🎓
Outdoor activities on water ⛵
Outdoor activities on land 🍁
PASSIONS: ❤️ ⛵
Great for volunteering and outdoor water activities
MEDIAN HOME PRICE: $428,000
Water on three sides, good air quality and a moderate climate make this charming historic Chesapeake Bay city an ideal spot for those who love boating, fishing or a waterfront view. For the newbie, the city offers lots of recreational boating schools and chartering opportunities. There’s a high rate of local volunteerism and the downtown area, which doubles as Maryland’s state capital (and was the U.S. capital for a year starting in 1783) is very walkable. Doctors per capita are at the national average. Elevation is 40 feet. On the downside, cost of living is 41% above the national average and the crime rate is above the national average. Taxes are on the high side, too; while Social Security benefits are exempt from tax, the top state/local income tax rate is 8.31% and the state has both an estate and inheritance tax.
PASSIONS: 🎨 🎓 🍁
Great for arts, lifelong learning and outdoor land activities
MEDIAN HOME PRICE: $462,000
Located 285 miles south of Portland, this cultural outpost offers art galleries and the nine-month a year Oregon Shakespeare Festival, all set amid scenic mountains and forests. Southern Oregon University hosts an Osher Lifelong Learning Institute and allows free auditing of regular college classes. The highly walkable downtown (elevation: 1,950 feet) is set in a moderate climate with little snow, good air quality, a low serious crime rate and a high number of doctors per capita. Nature trails are just outside town. But the cost of living is 40% above the national average and Oregon makes up for its lack of a sales tax with an income tax rate that hits 9% at just $50,000 of income (with Social Security excluded). There is also a state estate tax.
PASSIONS: 🎨 🎓 🍁
Great for arts, lifelong learning and outdoor land activities
MEDIAN HOME PRICE: $178,000
This affordable college town, just 70 miles east of Atlanta, has a vibrant arts scene. The University of Georgia hosts an Osher Lifelong Learning Institute, plus offers seniors free admission to regular classes. Mild terrain and climate (the nation’s first garden club was founded here in 1891) and good air quality are all conducive to warm-weather outdoor activities at an elevation of 600 feet. The ratio of doctors per capita is sufficient. Cost of living is 7% below the national average and the serious crime rate is low. Georgia doesn’t tax estates or Social Security benefits and offers a generous additional break for other retirement income. Top state income rate is 5.75%. One notable downside: Not very walkable.
Passions: 🎨 🍴 🎓 ❤️ ⛵ 🍁 ⛳
Great for arts, fine dining, lifelong learning, volunteering, outdoor water and land activities and golf
MEDIAN HOME PRICE: $369,000
Sunny capital of Texas offers scores of dining and entertainment venues (including the annual SXSW festival), plus learning opportunities at the University of Texas, all surrounded by dozens of golf courses. The city boasts a high number of physicians per capita, good air quality, a good economy and a high rate of volunteering. The impressive state capitol building is higher than the one in Washington, D.C. At an elevation of 300 feet, the city is very bikeable and somewhat walkable. While there is no state income or estate/inheritance taxe, the cost of living is 30% above the national average and the serious crime rate is slightly above the national average.
PASSIONS: ⛵ 🍁
Great for outdoor water and land activities
MEDIAN HOME PRICE: $440,000
Lots of snow guarantees vibrant downhill and cross-country skiing in this scenic “Outdoor Playground of the West” 160 miles southeast of Portland. Other outdoor pursuits at an elevation of 3,600 feet around the north-flowing Deschutes River include fishing, tubing, hiking, rock climbing, bicycling and paragliding. Besides good air quality, a low serious crime rate and a high number of doctors per capita, the area boasts a strong economy. But Oregon makes up for its lack of a sales tax with an income tax rate that reaches 9% on just $50,000 of taxable income (which excludes Social Security). There’s also a state estate tax. The town itself is not very walkable. Cost of living is 34% above the national average.
PASSIONS: 🎓 ❤️ 🍁
Great for lifelong learning, outdoor land activities and volunteering
MEDIAN HOME PRICE: $299,000
The surprisingly mild climate in Idaho’s capital city, nicknamed “City of Trees,” is conducive to outdoor land activities, while Boise State University hosts an Osher Lifelong Learning Institute and offers free auditing of regular classes for seniors. Other pluses include a high level of volunteerism, a high number of physicians per capita, a low serious crime rate, good air quality and a good economy. With an elevation of 2,700 feet, the city is very bikeable, though not as walkable. Cost of living is only 7% above the national average. There is no state income tax on Social Security earnings, nor a state estate/inheritance tax. Idaho’s income tax rate for married couples is 6.925% on taxable income above $23,000.
PASSIONS:🎨 🍴 🎓 ❤️ ⛵ 🍁
Great for arts, fine dining, lifelong learning, volunteering and outdoor water and land activities
MEDIAN HOME PRICE: $604,000
This buzzy historic coastal state capital city of 685,000 offers a wealth of cultural. and educational activities. Not too surprising, considering there are more than 50 area colleges. Boston has good air quality, abundant doctors per capita, and a good economy. At an elevation of 140 feet, the city, named for an English town, is both highly walkable and bikeable. The top state income tax rate is only 5% and there’s no state income tax on Social Security earnings. On the negative side, there’s a state estate tax and a higher than average serious crime rate. But the big downside is the cost of living: 82% above the national average.
PASSIONS: 🎨 🎓 ❤️ 🍁
Great for arts, lifelong learning, volunteering and outdoor land activities
MEDIAN HOME PRICE: $742,000
This city, 30 miles northwest of Denver, is at the center of a huge recreational open space abutting the Rockies at 5,400 feet of elevation, which can be enjoyed in 10 months of annual sunshine. It’s also the home the University of Colorado, which allows seniors to audit courses for free. Boulder is a walkable and bikeable city with a low serious crime rate, good air quality, abundant doctors and a strong economy. Volunteering is a way of life here. While there is no state estate/inheritance tax, the state income tax (a flat 4.63%) does hit Social Security benefits. One big downside is the cost of living: 87% above the national average.
Passions: ❤️🍁 ⛳
Great for volunteering, outdoor land activities and golf
MEDIAN HOME PRICE: $317,000
This Phoenix suburb, named for Arizona’s first veterinary surgeon, offers myriad outdoor activities, including 185 golf courses in the region. There’s a low serious crime rate, a good economy and a high rate of volunteering. With an elevation of 1,200 feet, the city is very bikeable, although not all that walkable. There is no state income tax on Social Security earnings and no state estate/inheritance. The sate income tax rate tops out at just 4.54% on a married couple’s taxable income above $317,900. On the downside, the number of doctors per capita is below the national average and the air quality is poor. Cost of living is 23% above the national average.
Chapel Hill, North Carolina
PASSIONS: 🎨 🍴 🎓 🍁
Great for arts, fine dining, lifelong learning and outdoor land activities
MEDIAN HOME PRICE: $376,000
The home of the University of North Carolina, which offers free auditing of classes for senior citizens, this college town has been called America’s “foodiest small town” for its range of culinary options. It also has a high number of physicians per capita, good air quality, a low serious crime rate, a strong economy—and quirky blue fire trucks. There’s no North Carolina income tax on Social Security benefits and no state estate/inheritance tax. The state income tax rate is a flat 5.499%. At an elevation of 500 feet, the city is somewhat bikeable, but not very walkable. Cost of living is 30% above national average.
Charleston, South Carolina
PASSIONS: 🎨 🍴 ⛵ ⛳
Great for arts, fine dining, outdoor water activities and golf
MEDIAN HOME PRICE: $322,000
This historic coastal city brims with activities, both indoors and out. (The first game of golf in the U.S. took place here.) Pluses include a high number of doctors per capita, good air quality and a good economy. There’s no state estate/inheritance tax, no state income tax on Social Security benefits and there are additional tax breaks on pension income. But the state income tax rate tops out at an above average 7% on taxable income of just $14,860. At an elevation of 20 feet, the city is somewhat bikeable, but not very walkable. Cost of living is 22% above national average.
PASSIONS: 🍴 ❤️ ⛳
Great for fine dining, volunteering and golf
POPULATION: 1.34 million
MEDIAN HOME PRICE: $217,000
Scores of public golf courses plus fine dining (far beyond the nation’s first drive-in restaurant, which opened here in 1921) and what is said to be the nation’s largest arts district distinguish the Big D. At an elevation of 430 feet, the city is somewhat walkable and bikeable and has an adequate number of physicians per capita and support for volunteering. Atop of a strong economy, there is no state taxation of income, estates or inheritances. Cost of living is only 8% higher than the national average. On the downside, the serious crime rate is above the national average and the air quality is poor.
Great for lifelong learning
MEDIAN HOME PRICE: $219,000
The University of Arkansas offers free tuition to senior citizens at its flagship campus in this Ozarks city 200 miles northwest of Little Rock. Besides a cost of living 1% below the national average, other pluses include good air quality, adequate number of physicians per capita and a good economy. At an elevation of 1,400 feet, the city (originally named Washington) is somewhat bikeable, although not that walkable. There is no state estate/inheritance tax and there’s no state income tax on Social Security benefits, plus there’s a small additional break for pension income. But the state income tax reaches 6.9% on a married-couple’s income above $35,099. The serious crime rate is above national average.
Las Vegas, Nevada
PASSIONS: 🎨 🍴 ⛵ 🍁 ⛳
Great for arts, fine dining, outdoor water and land activities and golf
POPULATION: 2 million (Las Vegas Valley)
MEDIAN HOME PRICE: $277,000
World-class entertainment centered around the hotels and casinos, famous chefs, and nearby water and land activities, including golf, grace this exploding desert valley. (In 1900, the population was just 18.) While summers are hot and dry, the other nine months are quite pleasant, and sun is year-round. At an elevation of 2,000 feet, the area is somewhat walkable and bikeable. A good economy is bolstered by no state income or estate/inheritance tax. Downsides include poor air quality, low ratio of physicians per capita and a high serious crime rate. Cost of living is 18% above the national average.
Los Angeles, California
PASSIONS: 🎨 🍴 🎓 ⛵ 🍁 ⛳
Great for arts, fine dining, lifelong learning, outdoor water and land activities and golf
POPULATION: 4 million
MEDIAN HOME PRICE: $686,000
The City of Angels has multiple colleges and universities offering reduced-price programs for senior citizens, world-class restaurants, numerous performance venues, a wide range of outdoor activities and many golf courses. Pluses include 28 days a year of sun, sufficient physicians per capita and a strong economy. Despites its reputation as car dependent and congested, the city, with an elevation of 300 feet, is both very walkable and bikeable (despites safety concerns for bikers). There is no state tax on Social Security benefits, estates or inheritances. But the state income tax hits a hefty 9.3% on taxable income above $150,000 per couple and goes up to 12.3% for the very wealthy. Among the drawbacks: poor air quality (although better than it used to be) and a serious crime rate above national average. Cost of living is 95% above national average.
New York, New York
PASSIONS: 🎨 🍴 🎓 ⛵ ⛳
Great for arts, fine dining, lifelong learning, outdoor water activities and golf
POPULATION: 8.6 million
MEDIAN HOME PRICE: $682,000
Dozens of colleges, fabulous arts and dining, and even golf courses accessible via subway can be found in the country’s largest city. Pluses include a high number of physicians per capita, good air quality and a strong economy. With an elevation of 30 feet, the Big Apple is very walkable and bikeable, despite concerns about bicyclist safety. There is no state income tax on Social Security benefits, plus there are additional state tax breaks on pension income. But there is a state estate tax, the combined state and city income tax rate can reach a whopping 12.696% and the cost of living is 109% above national average.
Pinehurst, North Carolina
Great for golf
MEDIAN HOME PRICE: $281,000
Some 40 golf courses, led by famous century-old Pinehurst Resort, plus golf schools surround this scenic village 90 miles east of Charlotte. Pluses include an extremely low serious crime rate, above-average rate of doctors per capita and good air quality. At an elevation of 600 feet, the town, originally named Tuftstown, is somewhat walkable and bikeable. There are no state taxes on Social Security earnings, estates or inheritances. The state income tax rate is a flat 5.499% and the cost of living is 11% above the national average.
PASSIONS: 🍴 ⛵ 🍁
Great for fine dining and outdoor water and land activities
MEDIAN HOME PRICE: $314,000
This coastal city offers a wide variety of water and land recreation, including boating, kayaking, rafting, cross-country skiing, hiking and bicycling. There’s a good restaurant scene, a low serious crime rate, a high ratio of doctors per capita and good air quality. The city—named after an island in the English Channel—has an elevation of 60 feet and is very walkable and bikeable. There is no state income tax on Social Security earnings, but there is a state estate tax. The state income tax rate reaches 7.15% at taxable income above $103,400 for a couple. The
PASSIONS: 🎨 🍴 🎓 ❤️ 🍁 ⛳
Great for arts, fine dining, lifelong learning, volunteering, outdoor land activities and golf
MEDIAN HOME PRICE: $426,000
City affords wide range of pursuits, including free senior citizen auditing of classes at Portland State University. Pluses include a high ratio of physicians per capita, good air quality, a high rate of volunteering and a good economy. At an elevation of 50 feet the city—named after Portland, Maine—is highly walkable and bikeable. The state makes up for its lack of a sales tax with an income tax rate that hits 9% on just $50,000 of income (with Social Security excluded). There is also a state estate tax. Cost of living is 48% above the national average.
Salt Lake City, Utah
PASSIONS: 🎓 ❤️ ⛵ 🍁
Great for lifelong learning, volunteering and outdoor water and land activities
MEDIAN HOME PRICE: $402,000
Mountains, lakes and rivers create a choice of outdoor activities, including skiing, bird watching and fishing around this state capital city. Indoors, the University of Utah offers courses a wide range of courses for seniors in concert with the Osher Lifelong Learning Institute. The city has a high rate of volunteering, a high rank on the Milken Institute list of best cities for successful aging and a strong economy. At an elevation of 4,300 feet, it is very walkable and bikeable. There is no state estate tax, but the state income, levied at a flat 4.95% rate, hits Social Security benefits. The cost of living is 27% above the national average.
San Francisco, California
PASSIONS: 🎨 🍴 🎓 ⛵
Great for arts, fine dining, lifelong learning and outdoor water activities
MEDIAN HOME PRICE: $1.36 million
Surrounded by water, this scenic city is a mecca of culture and food, with 57 Michelin starred restaurants (compared to 76 in 10 times more populous New York). Opportunities for senior learning are offered at an Osher Lifelong Learning Institute at San Francisco State and at other venues. There’s a high ratio of doctors per capita, good air quality and a strong economy. Despite the famed hills, the city, with an elevation of 50 feet, is very walkable and bikeable, with both trails and protected bike lanes. There is no state estate/inheritance tax and no income tax on Social Security benefits, but the state income tax rate is a hefty 9.3% on income above $150,000 per couple and goes up to 12.3% for the very wealthy. The serious crime rate is above the national average, but the biggest downside is the cost of living: a stunning 205% above the national average.
Santa Fe, New Mexico
PASSIONS: 🎨 🍴 🍁
Great for arts, fine dining and outdoor land activities
MEDIAN HOME PRICE: $397,000
Scores of art galleries, fine restaurants and museums, plus world-class skiing, distinguish this scenic state capital mountain town (elevation 7,200 feet), 60 miles north of Albuquerque. Somewhat walkable and bikeable, the city has a high number of doctors per capita, good air quality and a low serious crime rate. There is no state estate tax, but the state income tax does hit Social Security benefits. The state income tax rate is 4.9% on taxable income of married couples above $24,000. The cost of living is 21% above national average.
PASSIONS: 🎨 🍴 🎓 ❤️ ⛵ 🍁 ⛳
Great for arts, fine dining, lifelong learning, volunteering, outdoor water and land activities and golf
MEDIAN HOME PRICE: $261,000
Nearby beaches, fishing, boating, a big arts/cultural scene and 30 golf courses dominate this Gulf Coast city 60 miles south of Tampa. With an elevation of 16 feet, the area is very walkable and bikeable, with good air quality, a strong economy and an adequate number of physicians per capita. The cost of living is only 9% above national average. There is no state income or estate tax. One downside: a serious crime rate above the national average.
PASSIONS: 🎨 🍴 🎓 ❤️ ⛵ 🍁 ⛳
Great for arts, fine dining, lifelong learning, volunteering, outdoor water and land activities and golf
MEDIAN HOME PRICE: $730,000
Still-booming Puget Sound city offers all the passions, including an Osher Lifelong Learning Institute at the University of Washington. At an elevation up to 500 feet, the city is extremely walkable, bikeable and even boatable, with good mass transit. Other pluses include good air quality, a high ratio of doctors per capita, a very strong economy, and a good volunteering culture. There is no state income, estate or inheritance tax. But the cost of living is a whopping 104% above the national average and the serious crime rate is also higher than average.
Traverse City, Michigan
PASSIONS: 🎨 🍴 ⛵ ⛳
Great for arts, fine dining, outdoor water activities and golf.
MEDIAN HOME PRICE: $255,000
Frontage on Lake Michigan, the famed Interlochen Center for the Arts, 50 area golf courses and a reputation as a top foodie town all make his city, 250 miles northwest of Detroit, a top passions choice. There’s good air quality, above-average doctors per capita and a decent economy. At an elevation of 600 feet the city—center of the nation’s largest area for growing tart cherries—is very walkable and bikeable. Cost of living is only 2% above national average. There’s no state estate or inheritance tax and no tax on Social Security benefits, plus additional breaks for pension income. The state income tax rate is a flat 4.25%. One downside: The serious crime rate is above the national average.
A journalist for nearly five decades, I’ve written for Forbes since 1987. I’ve covered personal finance, taxes, retirement, nonprofits, scandals and other topics that interest me. I also am the author of a novel, OFFSIDE: A Mystery. Email me at: email@example.com .
The World’s Retirement Havens – Top 10 Best Places To Retire In The World For 2018. ============= ► Subscribe for latest video ! ► https://goo.gl/lOasu9 ► Follow me on Twitter: https://goo.gl/srKHao ► Facebook: https://goo.gl/yB9XvG ============= Today, retiring abroad is about launching a new life in a new country, starting over someplace sunny and exotic with white-sand beaches or Old World culture. But there is no one way to determine the best place to retire for every person. And with a seemingly endless amount of choices, how will you ever find the right one for you. International Living’s most recent Annual Global Retirement Index 2018 compares 24 countries that give you the maximum return for your money and promise to deliver a better quality of life. Overall, the Index is based on ratings in 12 categories: buying and investing, renting, benefits and discounts, visas and residence, cost of living, fitting in, entertainment and amenities, healthcare, healthy lifestyle, development, climate, and governance. Here are the 10 retirement destinations in the world for 2018: 1. Costa Rica – The World’s Best Retirement Haven 2. Mexico – Convenient, Exotic, First-World Living 3. Panama – Friendly, Welcoming, and Great Benefits 4. Ecuador – Diverse, Unhurried, and Metropolitan 5. Malaysia – Easy, English-Speaking, and First World. 6. Colombia – Sophisticated and Affordable 7. Portugal – Europe’s Best Retirement Haven 8. Nicaragua – Best Bang-for-Your Buck in Latin America 9. Spain – Romance, History, and Charming Villages 10. Peru – Low Cost Living, Vibrant, and Diverse. Thanks for watching this video. I hope it’s useful for you. (This article is an opinion based on facts and is meant as infotainment) ============= If you have any issue with the content used in my channel or you find something that belongs to you, please contact: ►Business email: firstname.lastname@example.org Music by: Nicolai Heidlas (https://soundcloud.com/nicolai-heidlas) Title: 50 New Cities
My Uber driver and I struck up a conversation about the Orlando traffic and weather. The chatter soon drifted into stories about his experiences living and driving in Florida. I soon learned my driver’s name was Bob.
Raising his voice, and turning to get a look at my face in his rearview mirror, Bob asked me, “How old do you think I am?”
I am always nervous to make such a guess — uttering a number either too old, or too young, can chill the air.
But, before I could make a guess, Bob volunteered his age with a wry smile, “I am 81 years old and still working! Heck of a thing, don’t you think? 81, and still working.”
Bob’s voice trailed off, as he gently turned the wheel steering his Camry off the highway into the driveway of my hotel. At a volume almost too low to be heard, he muttered, “I had no idea it would be so long.”
“What’s that?” I asked.
Bob’s eyes darted to the rearview mirror again staring back at me. He replied flatly. “Retirement.”
Bob and millions of others are experiencing the new retirement. Yes, there have always been older people, and millions have retired before us, but retirement today is different.
There are many factors that can describe how life in retirement has changed. But, perhaps the biggest difference is time.
Social Security was enacted in 1935. More than an entitlement program, Social Security culturally framed how we think about retirement — particularly when to retire. While the ‘when’ of retirement, 65 years old, was simply a product of legislative negotiation, the number is now engraved into our social consciousness with nearly the same indisputable truth as Newton’s law of gravity. In the 1930s retirement was a story about a brief period of life that offered much needed rest from a life of work. As I observe in my book, The Longevity Economy, shortly after World War II, with the advent of pensions, social security, and modestly longer life, the retirement story framed older age as a short time filled with well earned relaxation, leisure, and family.
But, as my 81-year old driver keenly observed, retirement is very likely to be longer than planned and include more than simply play and rest. According to the Social Security Administration, an American male at 65 years old is likely to live an average of another 20 years. Likewise, an American woman, on average, is likely to live approximately another nearly 22 years.
Numbers alone, such as the cold clarity of 20 years, rarely provide insight. Instead, stories that explain what the numbers may mean can give context and inspiration to comprehensive retirement planning. So how might the 20-plus years in retirement be imagined?
Translating years to days, two-plus decades of retirement is about 8,000 days. 8,000 days is also roughly the same amount of time from birth to legal drinking age – 21 years old. Put another way, life between 21 years old and what many might call midlife in their later 40s, is another 8,000 days. And, from midlife, to the seemingly preordained retirement age of 65 years old, is – you guessed it – about another 8,000 days.
The point is retirement is not a brief period of life after full-time work. Rather, retirement is equal to one-third of your adult life.
Moreover, life in retirement is equal to other major life stages that benefitted from countless people, institutions, media, advertising, social norms, and more that guided how you lived in, and moved from, one phase of life to another. And, during each of those 8,000-day periods there were many transitions as well as planned and unplanned events that punctuated life.
Unlike other life stages, there are far fewer guideposts to help navigate the later one-third of adult life. Images of golf courses, bike trails, cafés, beaches and other trite imagery often found in retirement brochures may provide dreams and inspiration to some, but 8,000 days sitting at a café is not realistic for most. And not even desirable for many. Why should we assume that retirement, another 8,000 days of adult life, should be somehow more predictable, or any less filled with transitions, celebrations, and revelations, than any other life stage?
Viewing retirement as a full, long 8,000 days stimulates the imagination and raises many questions about later life.
There is the seemingly singular retirement planning question that becomes even more critical when realizing that there is the real possibility that our lifespan could out live our wealth span. How much money will be needed, not for a brief time, but for a much longer time than most of us imagine?
Then there are the less obvious considerations that are not typically part of our retirement planning story. Here are just a few.
What will we do with all that time – work part-time, play, travel, learn something new, remarry, volunteer, provide care? Have we made the plans, and established the connections, and formed the relationships necessary to engage in those activities before punching-the-clock one last time and entering into retirement?
Where will we live? In the previous 8,000 day periods of life we may have moved at least one or more times. Why shouldn’t we assume that we might move once, twice or more in older age as our preferences, health, and perhaps finances demand?
Retirement planning for most has been about numbers – savings and the amount of money necessary to ensure financial security through the years – certainly not incorrect, but woefully incomplete. Reframing retirement for what it is, one-third of adult life forces us to realize that there are far more opportunities, and challenges, than our current story of retirement planning includes.
8,000 days of retirement. As my 81-year old driver Bob might say, “heck of a thing.”
When is someone too old to work and too old to hire? Employers and workers don’t agree, and that’s a problem. With so many people living well into their late 80s, 90s, even 100, many older workers need a job past 65, not just to stay engaged and healthy, but to save more for retirement.
“It’s important to raise awareness that these disconnects exist,” says Catherine Collinson, ceo and president of Transamerica Center for Retirement Studies, and author of the center’s latest annual retirement survey report, which delves into these issues. “So many workers are looking to extend their working life past 65 and gradually transition into retirement, from full-time to part-time. Employers recognize the need but haven’t updated business practices to be supportive of them.”
Here are some of the surprising findings.
Question 1: At what age is a person “too old” to work? Almost two-thirds of employers (65%) say “it depends on the person,” compared to 54% of workers. That’s encouraging, but the not-so-good news, Collinson says, is that among employers who cited a specific age when a person is “too old” to work, the median response was age 70—five years younger than age 75—the median age cited by workers. So, there’s a five-year gap.
Question 2: At what age is a prospective candidate considered “too old” to hire? Some 64% of employers say “it depends on the person.” Another 12% are unsure. “The remaining employers say age 64!” says Collinson, alarmed, noting that’s the median response. “This illustrates the opportunity for employers to open their hearts and minds to older workers.”
Most employers offer a 401(k) or similar retirement plan, and that opportunity to save for retirement through work is key to workers’ retirement security. Still, only 54% of workers age 65-plus are offered a workplace retirement plan, Collinson says.
Among those who are offered a plan, the uptake is high: 78% participate, and their annual contribution is 10% (median) of pay. Part of the solution is encouraging more employers to offer retirement plans and to extend participation to part-time workers. Among employers that offer a 401(k), only 41% extend eligibility to part-time employees, she says.
Collinson suggests additional moves for employers to be more age-friendly. Employers should consider adopting a diversity and inclusion policy statement that specifically includes age among other characteristics including race, gender and physical ability. Just 23% of employers in the survey have done so.
And employers should consider offering a formal phased retirement program. Only 20% of employers in the survey have one in place; yet 47% of workers envision such a future. It’s one she sees for herself “when retirement grows closer on the horizon,” even though, now 55, she’s been stuffing a 401(k) since age 24.