On the surface, it would appear to be a conundrum

As retirement edges ever closer for the entire boomer generation, economists warn of a labour shortage when this bubble finally crosses the threshold. It seems their talents and efforts will be missed, not to mention the taxes generated by their continued employment. 
It also raises a concern for the funding of pensions, as the ratio of retirees to workers steadily increases. Some pension expects, including Fred Vettese, chief actuary of Morneau Shepell, say policies should be implemented to slow the exodus of the boomers, which would have a positive impact on a range of retirement-related issues.
Yet, at the same time older workers aren’t exactly finding the chair being pulled out for them, facing what some advocates say is ageism. So, how do you keep older workers in the workforce when it seems clear many employers don’t want them? The answer, Vettese said during a recent conversation, is agreeing to a solution that works for employee and employer.
“People in their 60s, and there are exceptions, should be working part-time.”
Not all people, of course. Those with the means and desire to retire outright are happy to take that route, he says, but some older workers either have to or want to continue working. 
Vettese will tell you he is a proponent of an older retirement age. On one hand increasing the retirement age would simply be a reaction to increased longevity where one might now spend 20 to 30 years in retirement, and on the other it would help resolve concerns about adequate retirement income. 
Additional working years would provide more time to build a secure retirement, especially in a low interest-rate environment that produces less than stellar returns for individual investors. It’s an environment that isn’t expected to change anytime soon. At some point, “we have to decide how many years of retirement we should have,” he maintains. 
“We are going to need people to continue working. This is a good solution. It takes care of the interest-rate problem, it takes care of the cost-of-retirement problem – the fact that we are living longer – just by having people stay in the workforce a bit longer.”
Exceptions should be made for people no longer able to continue working, but for the most part that’s a discussion regardless of the official retirement age, says Vettese, who uses himself as an example of someone putting in fewer hours now when he is 62 than he did when he was 50 or younger. 
“It’s not just a case of people who are working in very physically demanding jobs. People working in any type of job are likely not going to be as productive at 65 as they were at 45. I know I am productive, but I certainly can’t work the hours that I use to work, and everyone I know in my position feels the same way. They want to maintain some attachment to the workforce, but they don’t want to work the grind anymore.”
When it comes to the experience of an older worker, that’s only worth so much, and age and wisdom might not be all they are cracked up to be, he says.
“If you look at the top chess players in the world, the oldest is 47 with the top player being 25. You might have thought that of any game where players get better as they get older, chess would be it … you figure that by 50 you ought to be like Yoda – able to beat anybody. But that isn’t the case. Ultimately, youth trumps experience.”
These, and other observations and analysis, are in his book, The Essential Retirement Guide: A Contrarian’s Perspective. As the title suggests, Vettese finds himself going against some of the prevailing winds of retirement preparedness. He wrote it, he tells ARIA, because he wanted a book more approachable to the average person than his first book, co-written by current federal finance Minister Bill Morneau, The Real Retirement. That book was subtitled: Why you could be better off than you think and how to make it happen.
The first book, he says, dealt with broad societal issues, but wasn’t for the average person on the street. “I wanted to have a book that was more approachable, maybe a bit more entertaining.” He also wanted to “push back” on what he calls some of the “retirement myths that seem to be very pernicious,” including predictions that higher interest rates will return. They might, but not for a very long time, he says.
“The big impact is that people are either going to have to save more or retire later, and there are signs that they are doing both.”
One particular area to which he brings a contrarian view is the national savings rate, a number that has been thoroughly misunderstood, he states. The rate is determined by Statistics Canada to show how much households are saving, and a low savings rate is “cited again and again as evidence” for enhancing retirement income programs, including the Canada Pension Plan (CPP).
“It’s completely misleading and not at all suitable for measuring how people are saving for retirement.”
How is that so when many experts say Canadians are not saving enough for retirement, particularly those without a workplace pension? Vettese answers it’s because the rate does not include factors such as CPP or workplace pension contributions, and because “the national savings rate is taken as a broad average across both active workers as well as retirees” and as more people retire, the rate goes down because retired people generally don’t save.
The rate, he continues, is also influenced by income withdrawn by retirees from their savings. As retirement savings dwindle, the rate is impacted negatively, leading to a low national savings rate. 
“The number makes no sense at all and this is the number that we rely on to a large extent, explaining why the country is in trouble.”
He is less of a contrarian when it comes to workplace pensions, of which he is a big fan. But he doesn’t see any type of renaissance for pensions in the private sector, reiterating his view that people who need to save are doing so. He is also a fan of annuities rather than managing your own income drawdown in retirement. 
He returns to a contrarian position when discussing RRSP participation rates, generally held to be low. 
“In a given year Statistics Canada might report there are 25 per cent of taxpayer contributing to RRSPs. Once again, that sounds like a terrible number and it seems to show people aren’t saving enough, but it is misleading.”
Low-income people earning $25,000 a year or less, have no reason to save because income supports – CPP, OAS, GIS – will replace pre-retirement income, and retired people shouldn’t be included because they are spending, not saving, he says.
The focus, he continues, should be on middle-income families, and “that’s the cohort that really needs to save.” 
Breaking the retirement gap down to income quintiles, Vettese says those in the upper and lower income quintiles will have sufficient income to maintain their pre-retirement lifestyles, the lower because of income replacement programs, and the upper because they have sufficient means to save for their retirement. The problems lie in what he calls the third and fourth income quintiles, earning about $50,000 to $100,000.
“I found that about 15-20 per cent of people in those two income quintiles are going to have a significant shortfall … so there is a gap in the middle. That would be where we need the help. But how do you do that?
The answer to his own question, he offers, is an expansion of the CPP, but one targeted to the middle-income groups that need it most. The most effective way would be to double the CPP’s Year’s Maximum Pensionable Earnings (YMPE) to about $108,000.
Another retirement staple he takes on in his book is the 10 per cent rule which says an individual should be putting at least 10 per cent of annual salary aside for retirement. Speaking to that proverbial man on the street, Vettese says yes, do it if possible, but don’t if not possible.
“If you are 32 with a couple of kids in day care and you can’t save 10 per cent, don’t sweat it. Retirement savings is not the be all and end all. It’s a very important priority – but you don’t have to sacrifice everything else because of it.
“Retirement security falls somewhere between buying shoes for your baby and getting Super Bowl tickets. But at some point you do have to start making some hard decisions.” 

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