I took an older guy somewhere during my early-morning Uber shift, and we got to chatting about retirement. He was in his early sixties and was thinking about retirement in the next couple of years or so — he’d reached all the retirement “qualifications” in terms of his age, length of service, and so on — and when I asked him what he was going to do after retirement, he said quite simply, “I don’t know.” He had no outside interests other than his work, he said, and had no hobbies or anything to keep him occupied when he would quit working.
This set off all sorts of alarm bells in my head, because I’d confronted the very same thoughts when I planned on retiring back in 2016 on reaching age 62 (which seems to be the “killer” age discovered by the researchers).
Worse than that, I either know men personally or have heard of many instances of men who have died soon — very soon — after retiring early. (When men retire at a later age, they paradoxically seem to live longer, as the study shows.) Sometimes, men die within six months of getting their gold watch, after many decades of working with little or even no time off for illness. Where I differ from the study is that I think I know the real reason why this happens.
We’re working dogs.
As long as men have work to do, we do fine. We have a purpose in life, we get up in the mornings with a day’s work ahead of ourselves, and this gives us a reason to live. It’s all tied up, I believe, in our inherent nature as providers and all that goes with it. When that activity stops earlier than expected — at 62, most of us have at least fifteen or even twenty more years to live — subconsciously we still feel that we are capable of working, providing and in short contributing to ourselves and others.
But when that ends, it’s as though a switch is turned off somewhere and our brains simply say, “Oh well, that’s it,” and we die. It may be that illness has been kept at bay through our industry and now given an empty playing field, so to speak, it takes over; or it may be that we do things that are more dangerous (the study mentions driving more as one activity), or perhaps we working dogs just feel useless and our existence, pointless.
Kim du Toit, “Working Dogs”, Splendid Isolation, 2018-02-15.
April 15, 2022
QotD: Men without hobbies shouldn’t ever retire
May 24, 2019
Ontario universities’ “quarter-million dollar club”
Being a tenured university professor is generally a well-paid job, even in Canada. But thanks to an unintended interaction between pension legislation and retirement policies, older tenured professors are required to draw their pensions (which are pretty damned good by themselves) and their salaries from the university, which boosts many of them well into the quarter-million a year range:
University College, University of Toronto, 31 July, 2008.
Photo by “SurlyDuff” via Wikimedia Commons.
Ontario is a weird place sometimes. One month ago, the government announced that it was implementing a performance-based funding plan which – if you took the government’s half-thought-out comments seriously – raised the possibility that hundreds of millions or perhaps even billions of dollars currently projected to be spent on institutions might be snatched away if institutions failed to hit some ill-defined targets in a type of contract-based funding system. You’d think this would be a big deal, something people would want to talk about and discuss.
But no. Somehow, this is not what is currently obsessing the Ontario university sector. Instead, apparently, we need to talk about how it’s a human rights violation for professors to be asked to enjoy their retirement on a six-figure annual pension.
Crazy? Well, yes. Here’s the deal. Time used to be that universities could tell professors to retire at age 65 or 67 or whenever. Over the course of the 2000s, provinces gradually got rid of mandatory retirement; in Ontario this occurred in 2006, when the provincial government amended the Human Rights Code to that effect. It should have surprised absolutely no one that more and more full professors, who towards the end of their career routinely make over $180,000 per year, decided to delay retirement not just past 65 but pretty much forever. In 2011, only 6.7% of professors were over 65 and 0.9% 70 or over. Just five years later in 2016, that was up to 10.2% and 3.3% respectively. At the time, I estimated that the compensation costs for the over-65s amounted to $1.3 billion, or enough to hire about 10,000 new junior faculty. The share of that going to the 70-pluses would amount to a little north of $400 million.
But here’s the thing: federal pension legislation requires individuals to start drawing down their pensions at age 71. You can’t opt-out. And so as a result you get individuals who are in what Carleton University economist Frances Woolley recently called the “quarter-million dollar club” (do read Frances’ piece – everything she does on higher education is excellent, but she is extra-excellent on this one). Even if you understand the legislative path that led us here, you probably – rightly – think this is an outrageous sum, particularly in light of the fact that research productivity tends to decline over time and teaching loads among full professors are not all that onerous.
On the other side of the pond, a recent tribunal ruling at Oxford’s St. John’s College points in a very different direction:
Oxford and Cambridge universities can force old professors to retire in order to boost diversity, a tribunal ruling suggests.
Prof John Pitcher, a leading Shakespeare scholar and fellow at St John’s College at Oxford, claimed that he had been unfairly pushed out at age 67 to make way for younger and more ethnically diverse academics.
He sued the College and university for age discrimination and unfair dismissal, claiming loss of earnings of £100,000 – but Judge Bedeau dismissed both claims.
June 5, 2018
Taxing Work
Marginal Revolution University
Published on 22 Nov 2016For most people in developed countries, retirement comes down to a choice: weighing the costs and benefits of continuing to work vs. leisure. An important factor influencing an individual’s decision is their government’s tax and retirement policies.
Most developed countries offer a government-run retirement system with benefits that kick-in at a certain age. That age varies from country to country, usually starting when a worker reaches their early sixties.
Of course, not everyone wants to retire simply because they can receive benefits. People that really love their work may choose not to retire. In some countries, though, that decision can be heavily penalized through lost retirement benefits.
Taxes on earnings plus penalties, like losing retirement benefits, gives us an implicit tax rate. Countries with higher implicit tax rates for older workers see a much lower labor force participation rate for people considered retirement age.
As you might imagine, these government policies on retirement can be extremely costly. Many European governments that penalize non-retirement have been working to reform these policies and reduce implicit tax rates for elderly workers.
In the Netherlands, which had one of the highest implicit tax rates in the 1990s, an older worker could have actually had to pay to work. Since the Netherlands reformed their policies surrounding retirement, they’ve seen an increase in the labor force participation rate for older workers.
In the next video, we’ll cover another big influence on female labor force participation: The Pill.
May 5, 2017
HRH The Duke of Edinburgh calls it a career
HRH Prince Philip, the Duke of Edinburgh, Colonel-in-Chief of the Royal Canadian Regiment, presenting the 3rd Battalion with their Regimental Colours, 17 April 2013. (via Wikipedia)
Mark Steyn on the announcement yesterday that His Royal Highness will be retiring from public appearances this fall:
Buckingham Palace announced today that the Duke of Edinburgh will retire from Royal engagements this autumn. He’ll be 96 next month, which is a quarter-century past the average retirement age – or four decades past it, if you’re a French or Greek civil servant.
His Royal Highness is the Queen’s consort. That’s an ill-defined role prone to an accumulation of frustrations: for Americans, think First Lady or Vice President for life. A lot of consorts are unpopular with their spouse’s subjects (for example, Queen Rania, Jordan’s current Hashemite hottie). Prince Philip has been doing it longer than anyone in the history of the Royal Family, since the day in 1952 when he and Princess Elizabeth were at Treetops in Kenya and received the news that George VI (the King’s Speech guy) had died. Harry Truman was in the White House; Stalin was in the Kremlin; some guy called Mao had just taken over in China. That’s a long time.
I last saw him five years ago in Glasgow with my daughter, who was impressed by how cool he was, and how spry for a nonagenarian. Elsewhere, opinions differ. He’s worshiped as a god in outlying parts of Vanuatu, but in Canberra the ruling Liberal Party went bananas and ended Tony Abbott’s premiership for giving the guy an Australian knighthood. Still and all, he’s kept the show on the road in an age hostile to the monarchical principle, and one which has seen the crowns of almost all his cousins come tumbling throughout Europe.
Steyn also recounts discussing the respective Australian and Canadian constitutions with Prince Philip during the Australian referendum on becoming a republic:
As a Canadian, I was somewhat distracted by the referendum Down Under, which I kept trying to slip into the conversation. But the Duke was inscrutable on that front – or perhaps, as I now think of it, quietly confident about victory. Toward the end, as he walked us to the door before my carriage turned back into a pumpkin, I made an offhand remark contrasting the 1901 Aussie constitution with the 1867 Canadian one, and the subject evidently engaged him, because he launched into a very well informed disquisition on the differences between the two. There were a half-dozen or so of us at dinner that night – an earl, a viscount, a baron, a knight, etc, plus a plain old mister (me). I’d assumed upon acceptance of my invitation that we guests would be there as unpaid jesters to amuse our Royal hosts. But, in fact, HRH was a quickwitted chap, and we were hard put to keep up with him.
One of my fellow diners, bemoaning the lack of agricultural workers in Britain, explained that his farm now brought in young Australians and South Africans, who were able to make ninety-to-a-hundred quid a day (about £60,000 a year) picking onions.
“Crying all the way to the bank?” said the Duke.
I thought that was a rather good line. Happy retirement.
March 16, 2017
Words & Numbers: Blocked by a State’s Wall of Taxes
Published on 15 Mar 2017
This week, James & Antony discuss the case of Connecticut’s budget shortfall. The state hopes to solve their financial problems by raiding the retirement accounts of previous Connecticut government employees who have moved out of the state, and take 30% of those savings. This plan would hurt retirees, break promises, and trap many people in the state based on a policy that may be illegal.
February 24, 2017
Well it is the twenty-first century after all…
Hey guys! I just bought marijuana for the very first time!
A thousand shares of a legal marijuana grower called Aphria, Inc. I am so conflicted — I don’t know whether I should feel counter-cultural or conformist…
I sold my last remaining Blackberry shares to cover most of the cost of the purchase, which (given Blackberry’s shrinking technological niche) was a bit of a relief.
Legal notice: Nothing in the above post should be considered in any way to be professional financial investment advice.
March 11, 2015
March 5, 2015
Tax Free Savings Accounts
At Worthwhile Canadian Initiative, Livio Di Matteo talks about tax free savings accounts (TFSAs), registered retirement savings plans (RRSPs), and why some people are getting upset that some Canadians benefit more from these financial tools than others do:
A major theme running under most of these arguments goes something like this — Registered Retirement Savings Plans (RRSPs) at least leave “a legacy of tax revenue to future governments” whereas TFSAs may generate “supernormal” returns that will escape taxation and on top of it will accrue primarily to the well-off.
However, when I think of RRSPs and TFSAs, I see them both as essentially the same. They are both “tax expenditures” that are designed to encourage saving by promising some type of tax incentive. The broader debate should really be about how we want to encourage more saving and then about “tax expenditures” in general rather than how much we should allow as limits to either RRSP or TFSA contributions.
However, if we are going to argue about RRSPs and TFSAs, to my mind what differs is the timing of the break. For an RRSP, you are getting the tax incentive upfront and deferring the taxes until you withdraw the money. For a TFSA, you are making the contribution with after tax dollars and allowing the contribution to accumulate tax free — the tax benefit comes down the road as the money grows.
[…]
Young households with children who face more cash constraints might find the RRSP more attractive while older households would probably find the TFSA more attractive. All other things given, both vehicles are of greater advantage to higher rather than low income earners because higher incomes are more likely to be able to save — period. If you are going to make the argument that TFSAs are somehow favouring the wealthy or higher income earners, you need to acknowledge that the same argument applies to RRSPs.
Update, 7 March: It kinda helps when I remember to include the correct link to an article…
January 6, 2015
Logjam at the top of Canadian academia
Another example of unexpected consequences, this time from Frances Woolley at Worthwhile Canadian Initiative, who says we need to beware of middle-aged men waving feminist flags:
On December 12, 2006, Ontario ended “mandatory retirement.” As of that date, employers could no longer base termination decisions on an employee’s age. Ontario was following the lead of Quebec and Manitoba, which stopped having a standard retirement age in the early 1980s. Within a couple of years, mandatory retirement had effectively ended right across the country.
Fast forward to 2014. The first Ontario professors to elude retirement are now collecting their pensions. Yup, Canada Revenue Agency requires people to begin drawing their pensions at age 71, regardless of employment status. The average salary of a full professor in Ontario is around $150,000 per year […], and university pension plans are generally fairly generous. So a typical professor working full-time into his 70s will have a combined pension plus salary income of at least $200,000 a year, often more. No wonder professors 65 and older outnumber the under 35s […]. Who would willingly give up a nice office, the freedoms of academia, and a quarter million dollars or so a year?
Now if the professors fighting to eliminate the standard retirement age had said, “we have a very pleasant lifestyle and we’d like to hang onto it, thank you very much,” I could have respected their honesty, if nothing else. But instead, they draped themselves in the feminist flag. A standard retirement age of 65 was wrong because it hurt women. Thomas Klassen and David Macgregor, writing in the CAUT (Canadian Association of University Teachers) Bulletin, challenged ageism in academy on the grounds that “Mandatory retirement at an arbitrary age is devastating for female faculty who often began their careers later than males and may have had interruptions to raise children.”
[…]
Two thirds of university teachers between 65 and 69 are men […], as are three quarters of those over the age of 70. This is not simply a reflection of an academy that, 20 or 30 or 40 years ago, when these folks were hired, favoured men over women. Let’s rewind five years, to when the people who are now 65 to 69 were 60 to 64. This is more or less the same group of people, just at two different points in time.
In 2005-6, just before the standard retirement age ended, 65 percent of academics aged 60 to 64 were male […].
In 2010-11, when that same cohort of people were 65-69, 68 percent of those working as university teachers were male. There is hardly any hiring of individuals into university teaching in that age group. The only plausible explanation of the three percentage point increase in the proportion of men in the academia is that more women than men retired in that cohort.
[…]
The PhD students in the pipeline are 47 percent female […], as are 46 percent of Canadian assistant professors […]. Just 23 percent of full professors, however, are women. Replacing over 65 full professors with PhD students would result in a more gender-balanced academy.
I’m not trying to argue that we should reintroduce mandatory retirement in order to achieve greater gender balance. I am merely pointing out that who thought the end of mandatory retirement would disproportionately benefit women and promote gender equity were mistaken.
August 17, 2014
QotD: Retirement age
Of the many problems discussed and solved in this work, it is proper that the question of retirement should be left to the last. It has been the subject of many commissions of inquiry but the evidence heard has always been hopelessly conflicting and the final recommendations muddled, inconclusive, and vague. Ages of compulsory retirement are fixed at points varying from 55 to 75, all being equally arbitrary and unscientific. Whatever age has been decreed by accident and custom can be defended by the same argument. Where the retirement age is fixed at 65 the defenders of this system will always have found, by experience, that the mental powers and energy show signs of flagging at the age of 62. This would be a most useful conclusion to have reached had not a different phenomenon been observed in organizations where the age of retirement has been fixed at 60. There, we are told, people are found to lose their grip, in some degree, at the age of 57. As against that, men whose retiring age is 55 are known to be past their best at 52. It would seem, in short, that efficiency declines at the age of R minus 3, irrespective of the age at which R has been fixed. This is an interesting fact in itself but not directly helpful when it comes to deciding what the R age is to be.
C. Northcote Parkinson, “Pension Point, Or The Age Of Retirement”, Parkinson’s Law (and other studies in administration), 1957.
May 10, 2013
Early signs of “rejuvenation therapy”?
An interesting report from the Harvard Gazette on some research into a possibility of reducing some of the effects of aging, specifically aging of the heart:
Two Harvard Stem Cell Institute (HSCI) researchers — a stem cell biologist and a practicing cardiologist at Brigham and Women’s Hospital — have identified a protein in the blood of mice and humans that may prove to be the first effective treatment for the form of age-related heart failure that affects millions of Americans.
When the protein, called GDF-11, was injected into old mice, which develop thickened heart walls in a manner similar to aging humans, the hearts were reduced in size and thickness, resembling the healthy hearts of younger mice.
Even more important than the implications for the treatment of diastolic heart failure, the finding by Richard T. Lee, a Harvard Medical School professor at the hospital, and Amy Wagers, a professor in Harvard’s Department of Stem Cell and Regenerative Biology, ultimately may rewrite our understanding of aging.
Research of this type may be very important as the baby boomer generation enters retirement age … not necessarily to extend total lifespan, but to increase the chances for healthy activity longer into our existing lifespan. Few of us would want to live to 100 if the last 20 years are pain-wracked, immobile, and inactive … but being able to live that long and managing to keep doing the things we like to do for most of that time? That’d be much more appealing to many of us.
April 25, 2013
What we “know” as opposed to what is actually true
We all know the NFL is in serious trouble as more evidence comes out about the relationship between playing professional football and brain damage in later life. But what we know may not be true:
Dr. Everett Lehman, part of a team of government scientists who studied mortality rates for NFL retirees at the behest of the players’ union, discovered that the pros live longer than their male counterparts outside of the NFL. The scientists looked at more than 3,000 pension-vested NFL retirees and expected 625 deaths. They found only 334. “There has been this perception over a number of years of people dying at 55 on the average,” Dr. Lehman told me. “It’s just based on a faulty understanding of statistics.”
The scientists also learned that, contrary to conventional wisdom, NFL players commit suicide at a dramatically lower rate than the general male population. The suicides of Junior Seau, Dave Duerson, and Andre Waters don’t represent a trend but outliers that attract massive attention, and thereby massively distort the public’s perception. More typical was the death of Pat Summerall, who passed away quietly last week at 82 after a productive post-career career.
Indeed, a 2009 study by University of Michigan researchers reported that NFL retirees are far more likely to own a home, possess a college degree, and enjoy health insurance than their peers who never played in the league. The myth of the broke and broken-down athlete is just that: a myth. A few surely struggle after competition ceases; most apply their competitive natures to new endeavors.
It’s true that skill-position players on rosters for five or more years in the NFL faced elevated levels of Alzheimer’s, Lou Gehrig’s, and Parkinson’s disease deaths. But some perspective is in order. Of the 3,439 retired athletes studied by Lehman’s group, less than a dozen succumbed to deaths directly attributable to these neurodegenerative killers. Had Parkinson’s killed one rather than the two retirees it did kill, for example, its rate would have been lower among players than among the general population.
It’s quite possible the NFL is concerned (and ensuring that it is seen to be concerned) primarily because of the need to address public perceptions, rather than as a defensive move against future or ongoing legal challenges.
March 24, 2013
The domestic economy of Cyprus is slowing to a stop
In the Telegraph, Colin Freeman looks at how the banking crisis is impacting ordinary Cypriots and retired EU citizens in Cyprus:
Last weekend, the small Mediterranean island was plunged into the epicentre of the eurozone crisis when Brussels finance chiefs, led by Germany, demanded a levy of up to ten per cent of savers’ deposits in return for a 10bn euro bail-out of the country’s ailing banks. The move left many of Cyprus’s 60,000-strong British community facing heavy losses on retirement nest eggs — and as the week rolled on, that looked like being just the least of their worries.
On Thursday, unhappy at the Cypriot parliament’s rejection of the deal, Europe’s Central Bank then threatened to cut financial life support for the island altogether, a move that would have led to its banking sector collapsing, and savers losing not just a percentage of their money, but all of it. It was only thanks to a last-minute agreement hammered out on Friday night, which is expected to restructure the country’s banks and restrict the levy to deposits of more than 100,000 euros, that all-out chaos was averted. For now, anyway.
[. . .]
Since last weekend, when all of Cyprus’s banks were shut to stop a run on withdrawals, work has ground to a halt, as the repair man has been unable to buy in the materials he needs from suppliers, who are all now demanding cash. The job symbolises the malaise of the wider Cypriot economy, built on shaky foundations, and now in a state of paralysis, with thousands of shops, businesses and restaurants unable to operate properly because of the financial uncertainty.
“None of my food and drink suppliers are taking bank payments any more,” said Yiota Vrasida, 43, who owns a café in the winding streets of the capital, Nicosia. “We can keep going until this weekend, but that is about it.”
[. . .]
“Nobody will want to leave so much as 10 euros in any Cypriot bank any more,” said Dino Karambalis, 49, an IT worker, standing at the end of a 30-people-long queue at the Laiki Bank, where he had 90,000 euros in savings. “They say this levy is only for Cyprus, but why should anyone believe that? This is undermining confidence in the euro as a whole, and in the whole EU project itself. I was pro-European before, but not now.”
This weekend, the Cypriot parliament sought to reassure smaller savers, saying those with less than 100,000 euros would face at most a levy of less than one percent. State television also talked of a one-time charge of up to 25 percent on savings of over 100,000 euros held at the Bank of Cyprus. With that in mind, capital controls will be imposed to stop a run on the banks when they reopen next week.
But whatever new measures come in, some damage has already been done by declaring savers’ accounts to be fair game in the first place. Britain’s Business Secretary, Vince Cable, warned on Friday that it could lead Northern Rock-style runs on banks all over the eurozone in future.
January 28, 2013
January 16, 2013
When is a retirement fund not a retirement fund?
When you draw it down long before retirement to pay ordinary living expenses:
This trend has been in place since the financial crisis, but the fact that it is accelerating is extremely disconcerting. First off, this is not the kind of behavior that should be witnessed in an “economic recovery.” Second, we need to remember the huge percentage of Americans on food stamps and/or disability. As we have discussed previously, many of them also have jobs. So essentially, a wage and a check from the government is still not enough to survive. They still need to tap into a loan from their 401k plans.
From the Washington Post:
More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.
[. . .]
“We’re going from bad to worse,” said Diane Oakley, executive director of the National Institute on Retirement Security. “Already, fewer private-sector workers have access to stable pension plans. And the savings in individual retirement savings accounts like 401(k) plans — which already are severely underfunded — continue to leak out at a high rate.”
A report due out this week from the financial advisory firm HelloWallet found that more than one in four workers dip into retirement funds to pay their mortgages, credit card debt or other bills. Those in their 40s have been the most likely culprits — one-third are turning to such accounts for relief.
