Category: Retirement

After many years of laborious work, retirement can be a welcome reward, but it can result in tension, anxiety, and depression. Mostly, retirement is linked with ageism, which refers to the stereotypes, prejudices, and discrimination towards others or oneself based on age. Many Americans are now living into their 80s, 90s, and beyond. Going by this trend, the U.S. is bound to experience growth in the size and proportion of older persons in the aging population.

It means families are increasingly confronted with challenges like caring for elderly relatives and making end-of-life decisions. These issues can lead to disagreements and possibly put older persons at risk of abuse and violence. Individuals may miss the sense of identity, meaning, and purpose that their career provided, as well as the social aspect of having coworkers or fear of outliving their money. Instead of feeling liberated, relaxed, and fulfilled, retirees may develop feelings of boredom, isolation, and lack of purpose. Older people with more social relationships, whether with family, friends, or the community, and better financial security are generally healthier, happier, and live longer lives post-retirement.

The most challenging tasks after retirement are maintaining healthy living and establishing a structure and personal relationships to replace what one had in the work environment. Work dictated the schedule of the days and weeks for decades, but this routine needs to be replaced. The quality of the family environment the older people return to after retirement varies considerably because not all families provide safe, stable, and high-quality care.

Many families face the dual challenge of caring for their parents while supporting young and adult children. Studies show that social connections become very important as people age, meaning nonfinancial aspects of retirement are also critical for healthy living (Howe, 2012, p. 456). Strong relationships are also associated with a more positive outlook and less stress, which positively impacts biological aging (Carstensen, 2016). If older people live longer in good health and in a supportive environment post-retirement, they will be able to do things they value the same way as younger people.

Policies that Support Healthy Family Development Post Retirement

The paper focuses on healthful living, social engagement, and financial security because they mainly affect the long-term health of the elderly post-retirement. The following policies can support healthy family development in the aging population after retirement:

• Health promotion and disease prevention throughout life and at older ages by targeting behavioral risk factors.
• Support for pension income and some income from work.
• Supporting the provision of informal care by promoting care well-being and connection with family, friends, and community.
• Long-term care insurance.

Many people look forward to retirement, but it can be challenging since the habits and routines throughout a career can be washed away by newfound freedom. The following sections describe how these policies can alleviate the issues of adjusting to aging post-retirement.

Health Promotion and Disease Prevention

Adopting a healthier lifestyle, such as increased physical activities in old age, improves balance, mobility, cognition, and well-being. Physically fit individuals tend to stay fit when they enter old age and stay healthier for a long time. According to Zhang et al. (2016), personal view of the elderly as fragile could influence their attitude toward seniors. Therefore, derivable benefits of physical activities increase social desirability for the older, besides keeping them mentally active.

Strategies to promote behavior change, such as providing cessation medication for smoking combined with behavioral counseling, can significantly reduce risky behaviors in old age. It includes intensive and multifaceted interventions involving physician advice, personalized feedback, follow-up, and educational materials that could help alleviate risky behaviors in old age and subvert possible abuse or violence against them.

Retirement and Pension Support

Income in retirement varies greatly, and this can affect the experience of retirement and health. It shows that policies and rules on retirement, pension, continued paid work, and income support in old age should be more thoughtful than simply raising the statutory retirement age. According to Carstensen (2016), Americans cannot finance 30-year retirements with just 40 years of work. Sometimes, a person loses pension income faster, which makes work unprofitable. Increasing pension compensation is necessary to improve the financial sustainability of pension systems and public finances for the elderly. Financial security helps reduce stress and enhance mental health once the elderly enter retirement. Increasing pension compensation will ensure the elderly can sustain themselves by increasing the money they live on and adjusting as necessary.

Support and Provision of Informal Care

Most people prefer living at home and remaining independent if possible. Access to adequate care at home is generally considered more effective and efficient in maintaining the quality of life. Sometimes, caring for a family member can be associated with reduced workforce participation or long-term loss of employment opportunities for the caregiver without public support (Venkatapuram et al., 2017).

Therefore, the public and the family need education on encouraging and helping older adults stay connected with their families and community. It includes arranging for family and friends to visit, enabling them to attend family parties, and volunteering for church, community, or charity organizations. According to Carstensen (2016) and Howe (2012, p. 488), transnationalism has become a social phenomenon because people no longer grow up and grow old in the same place with the same people and communities. Therefore, facilitating bonding between families beyond borders is a great way to help seniors overcome isolation and loneliness after retirement.

Long-term Care Insurance

Long-term care insurance arrangements can be suitable to supplement pensions for the aging population to alleviate financial security. The insurance coverage needs to be extended to all since 40 years of work is barely enough to support 30 years of retirement. It will help prepare for the potential heavy burden on the older generation post and cater to long-term care. The scheme should help people retiring to have sufficient funds, avoid undue pressure and focus on improving their quality of life.

References

Carstensen, L. (2016). Why we need to start thinking further into our future. Time. Web.

Cynthia, F. (2015). An update on strengths-based, solution-focused brief therapy. Health & Social Work, 40(2), 73-76. Web.

Howe, T. (2012). Chapter 13: Growing older in society. In T. Howe, Marriages & families in the 21st century: A bioecological approach (pp. 439-490). Wiley-Blackwell.

Venkatapuram, S., Ehnib, H.-J., & Saxena, A. (2017). Equity and healthy aging. Perspectives, 95(1), 791792. Web.

Zhang, X., Xing, C., Guan, Y., Song, X., Melloy, R., & Wang, F. (2016). Attitudes toward older adults: A matter of cultural values or personal values? Psychology and Aging, 31(1), 89-100. Web.

Though retirement party is not ending but rather a new beginning, it may become a splendid opportunity to celebrate certain life accomplishments. As a rule, speeches on such occasions are meant to give credit to the achievements of the retired and hardly ever contain any criticism. At my retirement party, listening equally favorable words from my colleagues, close friends and relatives would be the greatest praise for me because it would imply that I managed to balance my career and personal life.

I would be most pleased to hear that I always managed to allot enough time to my professional growth and my dear and near people. On the one hand, I would like to hear from my relatives that notwithstanding continuous overload, I have always been unselfish and responsive to their troubles.

On the other hand, it would be really pleasant to hear from my colleagues that I have been a good specialist and a good team player. With the present business environment, it is significant not only to obtain deep knowledge and profound practical skills but also to adapt to ongoing changes, focusing on cooperation instead of competition.

Disregarding the generally accepted format of the speeches at retirement parties, according to which they are mostly approving, sometimes even hypocritically approving, the speakers words would shed light upon not only my career achievements but also my interpersonal relationships with the rest of the staff which are a significant component of life accomplishments as well. In other words, I consider combining personal and professional growth the greatest possible achievement.

Appraising my current way of life, it can be stated that I am already on track to my dreams though certain changes should be made for increasing the likelihood of their realization.

I do my best for developing my professional skills, trying to balance various dimensions of my life. However, the improvement of my time management and goal stating skills would be helpful for enhancing the effectiveness of all my efforts. Wake (2008) noted that Consciousness is a continuous process and the only thing that changes is intentionality (p. 120).

Thus, watching my intentions is important for selecting the most appropriate methods of their realization and improving the future outcomes. Putting more emphasis on self-organization and soul-searching for defining the major life goals would increase the likelihood of achieving all of them by the day of my retirement party.

Frankels view of future orientation is relevant to my situation and allows me to choose the right direction for all my efforts. Frankel (2008) noted that future orientation implies a determined effort not to be constrained by the past or even the present, but to use all resources to capture the fruits of future opportunities under consistent external and internal threats and technological change (p. 14).

The choice of the most appropriate vector for all my power is significant because swimming with the stream and living without definite intentions and objectives can be compared to wandering in a forest not knowing the route. Frankels concept of future orientation has become an important solution in the process of my soul searching which motivated me to look into better tomorrow instead of being imprisoned in my present.

In general, it can be stated that certain changes in my self-organization and implementation o Frankels concept of future orientation would increase the likelihood of realization of my dream to hear equally favorable speeches from my relatives, friends and colleagues at my retirement party.

Reference List

Frankel, E. (2008). Quality decision management  the heart of effective futures-oriented management. Cambridge, MA: Springer.

Wake, L. (2008). Neurolinguistic therapy: A postmodern perspective. New York, NY: Routledge.

The 401(k)-retirement plan was introduced with the hope of solving the retirement benefits problem in the country, but despite being in existence for more than 30 years, the plan has failed to serve its purpose. Brady studied the effectivity of the 401 (K) plan on the retirement benefits of employees and successfully concluded that the 401 (K) is a complete disappointment (1). Using a Monte Carlo simulation, Brady could prove that an individual can have more benefits in retirement (around 20%) from alternative investment than from investment in the 401 (K) retirement plan (33). In an interview, Teresa Ghilarducci- the director of the Schwartz Center for Economic Policy Analysis, assert very distinctively that 401 (k) is such a product that is not designed according to the need of the middle-class Americans. Yet American people invest in the 401 (K) without knowing the actual cost of the investment, as a result, people receive lower retirement income from the investment (Breslow). Various writings on the 401(K) retirement plan benefits identified that the main economic cause for the 401 (K) failure is the information asymmetry. The 401 (K) policy is not instructive and not easily fathomable for the people who are supposed to receive the benefit from the program. On the other hand, the policy has a positive impact on the employers income. Another important fact is, the 401 (K) plan requires a higher expense ratio than the regular pension plan and this information is not clearly shared with the people who are supposed to be the actual beneficiaries of the plan. The providers of the 401 (K) retirement plan are also responsible for the failure of the plan, by concealing significant information and providing falsified information to the employees and to the organization the 401 (K) providers create information asymmetry which is a reason for the drastic failure of 401 (K) plan.

Another thing that could be a reason for the failure of the 401 (K) plan is the plan itself the plan offers fewer options for the investors whereas mutual funds offer more options for the investors. The traditional theory of economics suggests that more options are beneficial for an investor, but the paradox of choice suggests that sometimes more options have negative effects on the decision-making process. For many pension participants, it is difficult to decide between many investment options, and several studies proved that number of default investment options aid the decision-making process (Turner & Klein, 5). The study further discussed that offering fewer options than too many options is better for some people. Turner and Klein assumed that probably for this particular reason 401 (K) plan offers limited options for the pension participants (5). But these limited investment options could be an economic reason for the investment plan to experience a higher cost of management and therefore the reason for the loss of investment value. Curtis and Ayres successfully proved that investors of directed 401 (K) plans suffer the loss of investment value due to the decisions made by the fund manager as well as for the suboptimal choices of the investors (2). Besides that, the expense of the 401 (K) plan is a decisive thing to consider as the pension return of an employee is heavily affected by the fees associated with the employees 401 (K) plan fees. A booklet published by the US department of labor publications named A Look at 401 (K) fees delivers a seamless description of the fees associated with the plan, and generally, the plan involves three different types of fees. The investor of the 401 (K) plan pays administration fees, investment fees, and individual service fees (A Look at 401 (K) fees, 8-9). The booklet of the US department of labor shows that an increase in one percent of the fees in the 401 (K) plans can reduce the retirement income to twenty-eight percent (A Look at 401 (k) fees, 7-8). The investor has to pay the administration fee for receiving various management services from the fund management company, but the administration fees may vary from company to company. Usually, if the fund size is big then the administration expense would be at a lower percentage, and for the small size funds, the investors should be paying a higher administration fee. The investment fee is the major part of the fees in the 401 (K) plan; it is the fee that the investors pay for managing their investment fund. Investment fees depend on the expense ratios of all the selected mutual fund in the 401 (K) portfolio.

To calculate the expense of the mutual fund in an investors portfolio multiply the expense ratio by the final balance in that fund. For example, if the investor has $1000 in a fund and the expense ratio of the fund is.45% then the investor would have to pay $4.5 per year as the investment fee for the fund. Numerous financial advisors suggest that an expense ratio less than 1% is the reasonable expense for a mutual fund, but if it exceeds the percentage then investors should reconsider their investment; because the higher expense ratio would reduce the retirement benefit of the participants to a great extent. Another type of fees an investor might need to pay is the personal service fees; it is charged when the investor receives any personal service from the company such as receiving investment consultancy services. The investment consultancy service fees may be charged to the mutual fund if it receives the portfolio construction services from the experts. The most alarming issue related to the fees is the hidden costs; The 401 (K) plan have some hidden costs that are not disclosed to the pension participants, or these costs are explained in such a way that are not understandable to the investors.

To illustrate the effect of the compounded fees lets consider two different investors who invested their money in two separate mutual funds under 401 (K) plan. Both the investor invests $15,000 yearly and they will be saving the amount for next 30 years, the annual inflation rate is 2%, rate of return is also same 8.15% for both the fund but Mr. As fund has an expense ratio of.15% and Mr. Bs fund has an expense ratio of.65%. If we calculate the present value of the payment then we will find that present value of the growing annuity of Mr. A is $204,997 and present value of the investment of Mr. B is $216,301, calculation shows Mr. B pays more than Mr. A due to the higher expense associated with his investment (Present Value of a Growing Annuity). According to the Present Value of Growing Annuity, the initial payment for both the investor are 15000, the growth rate is the inflation rate of 2%, and rate of return for Mr. A (8.15-.15=8%), and for Mr. B (8.15-.65=7.5%). Consequently, if the investors want to benefit from the 401 (K) plan, then the investors will need to come up with a solution to all the problems with 401 (K) plan. Muller and Turner show that many 401 (K) investors do not change their investment plan when they really should roll over their money into a lower cost pension fund (5-7). It is strongly recommended to the retirement plan holders to roll over the investments if their pension fund has a high expense ratio. The employee and the employer should be aware of all the issues related to the 401 (K) plan, which includes, but are not limited to- understanding of mutual fund, rate of return, costs of the fund, dynamicity of the fund manager, and issues that changes the retirement benefits of the employee of the 401 (K) plan.

Works Cited

United States, Department of Labor, Employee Benefits security Administration. A Look At 401 (K) Fees. EBSA Resource Center, Aug 2013. Web.

Brady, Peter J. Can 401 (k) Plans Provide Adequate Retirement Resources? Public Finance Review 40.2 (2012): 177-206. Web.

Breslow, Jason M. Teresa Ghilarducci: Why The 401(K) Is A Failed Experiment. FRONTLINE. N.p., 2017. Web.

Curtis, Quinn, and Ian Ayres. Measuring Fiduciary and Investor Losses in 401 (k) Plans. 7^th Annual Conference on Empirical Legal Studies Paper, 2012, Web.

Muller, Leslie A., and John A. Turner. The Persistence of Employee 401 (k) Contributions Over a Major Stock Market Cycle: The Limited Power of Inertia. Benefits Quarterly 29.3 (2013): 51-65. Web.

Turner, John A., and Bruce W. Klein. Retirement Savings Flows and Financial Advice: Should You Roll Over Your 401 (k) Plan?. Benefits Quarterly 30.4 (2014): 42-54. Web.

Present Value of a Growing Annuity. Present Value of a Growing Annuity  Formula and Calculator. Finance Formulas, Web.

Facts You Did Not Know

• Americans spend 13-20 years in retirement.
• Social security offers on average $16,320 per year, only 30-40% income in comparison to a typical salary.
• Medicare does not cover long-term medical or assisted living costs (Kurt).
• 1/3 of households spend all their earnings, not putting away for retirement.
• 4 out of 10 Americans are reaching retirement age with limited or no savings (Dews).

The facts on this slide are just some of the worrisome statistics about retirement in the United States. For many people, retirement is a time to dedicate to travel and activities they always wanted. Others want to lead a peaceful, healthy life. However, it can quickly become a period of worry and stress. Many Americans do not realize the significant loss of income that comes with retirement and how a lack of preparation can be detrimental.

Significance

• Credible resources with up-to-date information.
• Inadequate preparation leads to poverty.
• The process of investing for retirement is long-term and complex.
• Financial and legal challenges require understanding the system.
• Strategies to begin your path to retirement.

A variety of credible resources and platforms were analyzed to compile the most accurate and up-to-date information on the topic of investing for retirement. Retirement funding consists of using a variety of resources to ensure income is diversified. The complex process requires understanding, and specific steps are developed to ensure you are on track with your savings. This presentation will educate about the strategies that can be taken to start investing for retirement to guarantee a stable future. I will discuss strategies for determining the amount that needs to be saved, which resources to use, and financial details of asset allocation.

What to Consider?

• Consider living costs  desirable 80% of the preretirement budget.
• Lifespan  modern medicine can prolong retirement for as long as 30 years.
• Savings generating a return  average net returns of 6-10% (OHara).
• Time horizon  how much time left to begin saving.
• Risk tolerance  investment may bring greater returns with higher potential risks.

Retirement investment is based on using this combination of factors to determine the best plan for an individual. Everything comes down to simple mathematics of balancing income and expenses. Therefore, the steps taken to ensure a stable retirement depends on current saving and investment strategies match lifestyle choices in the future. However, retirees usually do not require 100% of preretirement income since many expenses are reduced, including the need to save for major purchases and income tax.

Retirement Account

• Notable gap between generations in retirement account ownership (only 46% participation in 25-34 age gap).
• Retirement accounts are concentrated in the upper quartiles of the income distribution (Rhee and Boivie).
• Most retirement accounts offer tax benefits.
• Households with retirement accounts are able to save more.
• Savings last longer and cause less stress for families since everything is planned.

Unfortunately, trends suggest a much lower prevalence of retirement accounts in new generations. That is understandable since a retirement account can consume a significant portion of earnings. However, it is worrisome since, as seen in the chart, the amount saved is unsustainable for retirement. A retirement account is necessary to secure financial future, especially in a time of low Social Security and decreasing popularity of workplace pension.

How Much Do I Need To Save?

• Technology allows to use internet resources for basic calculations.
• Consider current income and desired retirement income.
• Evaluate current savings and assets, including home equity.
• Use financial advisors to determine the rate of return and consider inflation.
• The table shows recommended ratios of income that households should save at each age.

One of the most critical steps in calculating retirement plans should be to consider inflation. Over decades, ones saving may devalue significantly in terms of simple purchasing power. An annual retirement income of $40,000 results in $3,300 per month. With an average Social Security benefit of $1,300, it leaves approximately $2,000 one must fund (or $24,000 annually). With an estimated 6% return on investment, a retiree should save approximately $400,000 nest egg before tax and inflation.

Investment

• Key to a secure retirement is to invest safe assets.
• Investment produces compounded interest over the years until your retirement and after.
• Many retirement-focused investments offer tax incentives.
• A competently diversified portfolio is more profitable than all-cash savings accounts, able to overcome inflation.

Investing for retirement implies not just planning out future savings, but properly directing assets into long-term investments which will be producing money through compounded interest. A critical part of retirement accounts discussed here is that they have tax incentives which through competent financial planning can result in little to no tax collected at withdrawal once retirement age is reached. When considering large sums needed for retirement, inflation and tax are detrimental forces which can cause significant losses that proper investment can defer (Preparing Your Savings for Retirement).

Types of Accounts

• Social security  guaranteed by the government, based on lifetime earnings.
• 401(k)  usually offered through an employer or can be set up individually to withhold money through indicated payroll deduction.
• Individual retirement account (IRA)  varies by type, an investment tool consisting of stocks, bonds, and mutual funds.
• Pension plans  less popular in modern companies, requires employer contribution into a pool of funds that are invested and distributed to employees at retirement.

There is a wide variety of federal, employee, and private retirement account options. Each carries a certain amount of risk and return as well. The table highlights the average returns on investments based on these accounts. As evident, there is a significant difference between money market accounts such 401k and stocks that are part of the IRA.

Asset Allocation

• Diversification is Key to growth and managing risk.
• Diversification is a long-term protection against losses and financial forces out of your control.
• Rebalancing is necessary to maintain a comfortable level of risk.
• Investment risks should be assessed based on time frame and financial needs.
• Monitor portfolio to determine if a change in strategy is necessary.

When a portfolio is created, one becomes a factual investor even if you are not doing any stock trading and relying on professionals. Despite its seemingly complex nature, it is necessary to monitor investments to stay within comfortable bounds of risk. Diversification is critical to protecting from unexpected financial forces which may derail a high-risk investment. It is recommended that no more than 5% of the portfolio consist of a specific stock or bond (The Guide to Diversification).

Shifting from Saving to Spending

• Asset allocation in retirement helps to ensure funds for prolonged prosperity.
• Portfolio withdrawals should be gradual, with consideration of expenses and tax.
• More households than ever are choosing to save a portion of retirement income.
• Rigid spending plan protects from crises.
• Avoid spending all your money within the first few years.

It is absolutely critical to realize that entering retirement does not indicate that one should stop saving and investing into the future. Even certain accounts that require the withdrawal of funds (specific types of IRAs) set a deadline at 70 years of age. Rebalancing the portfolio remains a valid option considering the prolonged lifespan and increased costs of health care. Strict spending plans protect the boundaries of financial security for retirees who purchase non-essentials.

Distribution of Expenses

• Retirement does not result in a decrease of expenses as many people do not want to lose the quality of life.
• Emergency costs such as health care should be considered.
• Even with proper planning, income decreases.
• Planning expenses as far as a decade into the future with the impact of inflation can help be prepared.
• Housing (including utilities) is an expense often underestimated when planning for retirement.

The chart you see in this slide is an example of the extensive planning of expenses that needs to be done once retirement is underway. While it is difficult to predict prices, inflation, and financial conditions at a young age, once retirement starts, it is possible to plan such things out. Realistically, with many American families lacking competent retirement savings, such plans will be necessary to maintain an adequate quality of life as seniors.

Estate Planning

• Power of attorney and wills should be documented.
• A trust can be incorporated into a financial plan.
• Life insurance and estate plan can help the family after ones death.
• A clear outline of beneficiaries helps avoid legal battles.
• Each aspect of estate planning requires separate professional expertise.

Unfortunately, with the age of retirement, death is something that should be considered even if one has excellent health. Estate planning consists of various legal and financial technicalities which require the guidance of professionals to ensure ones wishes on the disbursement of the estate (including the investment portfolio) are fulfilled after passing. Many would like to ensure the financial well-being of their spouses and children which makes estate planning the final and necessary step in the estate planning process.

Conclusion

• Start saving as soon as possible!
• Consider financial factors and risks.
• Diversify portfolio of investment.
• Calculate income vs. expense ratios.
• Plan asset allocation to ensure long-term stability.
• Retirement plan is a guarantee for the future.

Using all the information in this presentation, you can begin to start saving for retirement today. Even though the prospect of the future is ambiguous, especially in terms of finances, it is a necessary step that everyone needs to take. Taking into account all relevant financial factors and risks, a competent and profitable portfolio can be developed which will address all relevant needs in the future. Use careful planning and asset allocation that would guarantee long-term stability. Do not leave your future up to chance, start investing for retirement today!

Works Cited

Dews, Fred. 10 Facts About Social Security and Retirement Saving. Brookings. 2015. Web.

Kurt, Daniel. 6 Surprising Facts About Retirement. Investopedia. 2017. Web.

OHara, Carolyn. How Much Money Do I Need To Retire. AARP, 2015. Web.

Preparing Your Savings for Retirement. Fidelity, n.d. Web.

Rhee, Nari, and Ilana Boivie. The Continuing Retirement Savings Crisis. National Institute on Retirement Security. 2015. Web.

The Guide to Diversification. Fidelity. 2017. Web.

Introduction

Many workers find it challenging to transition from work to after-work life, a significant transitional stage for every employee is retirement. At the moment, the number of people retiring from work is almost 46 million, and the number is expected to rise to 90 million by the year 2050 (Hansson et al., 2018). According to the Rural Health Information Hub, 20% of Americans are projected to be 65 years and older by the year 2030 (Shafik et al., 2019). Aging is a biological phenomenon which cannot be avoided and mostly peaks at retirement. This is when individuals leave the paid workforce and get finances from a pension scheme, thereby marking a significant transition period in a persons life (Hansson et al., 2018). There are profound life changes that come with moving to retirement, and older adults have to cope with them.

Challenges that Retirees Face

Retirement presents many challenges to people transitioning from work life. One of them is inadequate savings to help them live comfortably. Nowadays, life expectancy has increased, and people must have enough funds for later-in-life expenses since some workplace retirement plans do not meet most needs (Stenholm et al., 2016). After retirement, one is forced to struggle with the little they have saved, especially with the decreasing or stagnating income from Social Security, which cannot provide full benefits. Another challenge is longevity, which slightly differs between men and women. According to Hansson et al. (2018), a woman in her mid-50s has a 51% chance of reaching age 90, while a man has a 33% likelihood. Thus, retirees have the challenge of generating enough income to spend for this period. The third challenge is volatility to what Shafik et al. (2019) call Black Swan events, which are inevitable and unpredictable. The retired are very vulnerable during these events because they do not have the energy to cushion themselves, which leaves them very volatile. The last challenge is the lack of an appropriate social and emotional support system. Being connected to friends and family is an excellent way pensioners ward off anxiety and stress, without which their well-being is adversely affected.

Coping Strategies after Retirement

Attaining psychological comfort with the retirement life should be the main aim of the retired old adults. This transition is regarded as a process to manage stressors an adaptation to the new challenges of advanced age (Hansson et al., 2018). Older adults have different ways of handling and adapting to potential retirement stressors. It is a life phase where one moves to a new life level with new challenges and engagements, and one must have the right coping skills to adapt to the new phase. According to Hansson et al. (2018), some pensioners opt to engage in private jobs or businesses, while others choose to go back home and rest. At this time, a good social support system is needed to cushion them from the possibility of depression. Hansson et al. (2018) also state that the retired individuals who decide to rest at home end up making poor lifestyle choices, which result in negative health outcomes. Therefore, there are many ways of coping with the challenges that come with retirement.

Changes in Life Satisfaction at Retirement and After

Retirement can have various impacts on the well-being of a person. Two main factors affect an individuals retirement adjustment process: the type of transition and individual differences in the resource capability (Shafik et al., 2019). In older adults, retirement from work is a significant life event since it marks the transition from work life to a new phase, which presents the challenges discussed above. This type of change usually includes a process where individuals distance themselves both behaviorally and psychologically from a workforce. A person in this situation always has to handle such new challenges, social roles, opportunities and expectations, which have a significant effect on their well-being Shafik et al. (2019). Thus, many workers have problems adjusting to retirement, and thus, their level of satisfaction is altered.

Retirement adjustment is a process of coping with the changes in life, which always accompany the transition. To maintain daily lifes central aspects and structure, bridge employment has always been recommended. Shafik et al. (2019) suggest this approach has been useful since it predicts general life and retirement satisfaction. However, this is not entirely true because coping strategies cannot be generalized. Shafik et al. (2019) also note that many retirees have reported positive reasons for seeking bridge and alternative employments just before and after retirement, respectively. However, some adverse effects on general life well-being have been observed. It is only because of financial reasons that nearly all workers enter bridge employment; hence, the negative impact on their welfare. Therefore, life satisfaction depends on the kind of retirement transition and individual differences in the kind of resource endowment.

Changes in Physical Activity Patterns in Retirement

Many changes in moderate-level physical activity occur at retirement, for various reasons. Stenholm et al. (2016) conducted a cohort study and analyzed 9,488 employees of the Finnish public sector who retired between 2000 and 2011, and found that physical activity patterns change significantly at retirement. The study found out that 35% of retirees enter a formal physical activity program to maintain their health and keep themselves active and over 80% of them either engage in community or personal physical activity programs (Stenholm et al., 2016). From this research, statutory retirement seems to be linked to a short-term increase in moderate-level physical activity. There is maximized leisure-time physical activity among those retirees aged 70 and over; however, it declines with time (Stenholm et al., 2016). Therefore, there is a close relationship between statutory retirement and increased moderate-level physical activity.

References

Hansson, I., Buratti, S., Thorvaldsson, V., Johansson, B., & Berg, A. I. (2018). Changes in life satisfaction in the retirement transition: Interaction effects of transition type and individual resources. Work, Aging and Retirement, 4(4), 352-366.

Shafik, S. A., Abd-alaal, E. M., El-Afandy, A. M., & Mohamed, F. K. (2019). Coping strategies of older adults regarding retirement. IOSR Journal of Nursing and Health Science, 8(3), 57-70.

Stenholm, S., Pulakka, A., Kawachi, I., Oksanen, T., Halonen, J., & Aalto, V., Kivimäki, M., & Vahtera, J. (2016). Changes in physical activity during transition to retirement: A cohort study. International Journal of Behavioral Nutrition and Physical Activity, 13(1), 1-8.

Introduction

Ensuring that aging people have a decent life of the required quality is an essential part of the governments function. However, in light of the recent developments in the global economic and financial field, as well as on local levels, some of the present frameworks for supporting the aging population may become less efficient. The Old Age Survivor and Disability Insurance (OASDI), or Social Security, has been facing certain changes recently due to the increase in spending and the drop in revenue currently predicted for the future (McKeever and Walsh 74). Therefore, reconsidering the existing Social Security framework is highly recommended to ensure that aging people are provided with the necessary support and assistance. Specifically, by increasing the Payroll Tax Cap and raising the retirement age, the government will be able to receive a greater amount of financial resources for addressing the current problems with the Social Security and the retirement opportunities that lower and middle lower class citizens have.

Reasons for the Concern

The situation observed currently in the American social security context creates a rather dubious environment due to the loss of financial opportunities for retiring people and the drop in the amount of resources for their financial support. Although the recent account of the available resources for the retired in the U.S. have been mostly positive, the presence of certain disparities remains an issue. Specifically, the concerns regarding the financial support need to be outlined. According to recent studies, most American citizens have insufficient amounts of retirement savings (2020 Payroll Taxes Will Hit Higher Incomes). The observed trend can be attributed to the problems with employment that can be currently observed in the U.S. labor market. Therefore, financial concerns are likely to emerge in the future as the American citizens that are currently approaching the retirement age will have to seek state support and will have to face the issue of insufficient funding (Bagchi 4). For this reason, additional strategies for managing the crisis will have to be outlined.

Solutions

The rise in the Payroll Tax Cap appears to be the most legitimate solution to the current concerns regarding the decreasing opportunities for retiring and retired people. Indeed, although the number of people that can afford a tax cap of $132,900 is quite low in most communities across the U.S., ensuring that they submit the taxes that align with their annual earnings is central to the increase in the amount of funds available for the retired population (2020 Payroll Taxes Will Hit Higher Incomes). Therefore, increasing the Payroll tax Gap will allow accumulating a larger amount of resources that would, later on, be used to support the aging population.

It should be acknowledged that the solutions above are quite contentious for a number of reasons. Specifically, the argument concerning the rise in the retirement age might be seen as an endeavor to avoid offering people the retirement money that they have earned fairly. Indeed, to some extent, the specified solution appear to be slightly contradictory to the current demands of the aging population. However, on closer inspection, the opportunities for expanding the range of financial resources offered by the government are quite scarce, and the rise in the retirement age will allow accumulating the necessary amount of money to provide to thee target demographic. While the solution in question is not ideal, it will allow supporting both the retired community that is presently facing multiple financial issues, and the younger generation, which will have a greater amount of funds from the government as they retire in the future.

One could argue that the introduction of the Payroll Tax Cap is unreasonable given the recent crisis and the resulting drop in the revenues of large companies. Therefore, increasing the Payroll Tax Cap may result in the aggravation of the economic conditions in which multiple entrepreneurs presently have to survive (Bagchi 2). However, the specified change will only affect the people whose revenues are above the set amount of money, which suggests that the proposed solution will still work even in the current context of severe economic complications. Thus, the application of the proposed two interventions will help to solve the problem of the social security retirement fund system.

Conclusion

An increase in the retirement age, as well as a rise in the payroll tax cap, will allow the government to receive more funding to support the retired population. Specifically, the main reason behind a rise in the payroll tax cap can be summarized as the necessity for people with extraordinarily high revenues to contribute a greater number of funds to the Social Security fund. Indeed, given the current state of the U.S. wealth distribution framework, the number of people who can pay the tax payroll of $ 132,900, is quite sizeable. However, the specified amount of money is not eligible for taxation, according to the existing regulation. The specified legal provision seems highly unfair, particularly, for the people belonging to marginalized and disadvantaged communities, which have to manage severe financial and economic issues. In turn, the increase of the retirement age and the Payroll Tax Cap will allow for a greater range of opportunities offered to the aging community.

Works Cited

2020 Payroll Taxes Will Hit Higher Incomes. SHRM.org, Web.

Bagchi, Shantanu. Can Removing the Tax Cap Save Social Security? The BE Journal of Macroeconomics, vol. 17, no. 2, 2017, pp. 1-27.

McKeever, Gráinne, and Tamara Walsh. The moral hazard of conditionality: Restoring the integrity of social security law. Australian Journal of Social Issues, vol. 55, no. 1, 2020, pp. 73-87.

Choosing the optimal discount rate is a task that requires taking into account information regarding both the companys properties and external data. An employer should consider several factors relating to the business when setting the discount rate. In this case, the companys financial stability is determined by characteristics that include the type and scale of the firms business and the environment in which it functions. In this regard, each enterprise needs to consider its credit rating and assess its revenue potential to calculate its discount rating correctly. It is also relevant to consider the peculiarities of the economic system of the country where the business operates (Schroeder et al., 2022). In addition, an essential factor in this regard is the inflation rate, as it directly affects the economic conditions. Thus, the optimal discount rate will be higher in financially unstable companies or those located in countries with challenging business conditions.

The crucial information in determining the discount rate is the riskiness of the business and the possibility of access to capital. In this case, a vital factor in appropriately assessing the companys business potential and possible future revenues. The volatility of financial flows in enterprises of different types and directions may significantly differ, which affects the choice of a rational discount rating (Schroeder et al., 2022). Thus, companies with significant assets and access to them can set the discount rate at a low value compared to small companies. Consequently, it is rational for enterprises at the initial stage of development to set a high level of discounting due to the lack of guarantees of return on their activities. Therefore, the companys stability and ability to manage capital are essential factors in selecting a discount rate. Overall, a proper assessment of the companys properties, the economic environment, correct revenue estimates, and business risk characteristics allows the employer to choose a reasonable discount rate.

Reference

Schroeder R. G., Clark M. W., & Cathey J. M. (2022). Financial accounting theory and analysis: Text and cases. Wiley.

Many countries have their alternative ways of evaluating their workers. Basing on the country’s laws and policies, some have set the age of sixty years whereas others set the age of sixty-five years because the retirement age for public servants. an honest example is that the Asian and European countries with the retirement ages as sixty and sixty-five years severally.

Since the thought of the health standing of a person stands to be the premise for my argument. Then the simplest retirement age stands to be sixty-five years and will be created obligatory for any employee. This is often as a result of the individual has begun to age therefore complications like stress has begun to rise. The individual is visaged by a myriad of health complications such pains and aches that reduces the standard of service delivery.

Also, this age is appropriate thus on enable the freshly freshmen and ladies from schools and people aspiring for the use opportunities to induce an opportunity (Bokum & Bartelings, 2009). If this is often corrected at this stage, then the economy of the country is simply sustained thanks to equality in financial gain distribution across the ages. Besides, the age provides the worker an opportunity to own time for interaction with the family. This results from outlay a lot of his/her time on job and nation building. However, a personal retiring at this age is old and may still work higher if given an opportunity. In keeping with Emily (2011), creating this age obligatory for retirement could render several organizations with less old employees.

Many employers believe that employees who are sixty years and older, aren’t any longer productive in their job. Additionally, they’ll impose danger not solely to themselves however conjointly towards their colleagues. However, this could not be the case and it’s not a permissible reason to deny workers’ rights. If safety measures are properly determined, it’s sure that accidents would be avoided. Moreover, if management observes that a worker is not any longer capable of doing his task, they will be very tempted to send the employee into an improvement set up or delegate the person to an edge wherever he might be more economical. As an example, if a supervisor notices their worker is simply too recent to drive, the person ought to be transferred to a designation that is lesser at risk of danger like a document controller. Aside from the facet of productivity at work, individuals conjointly tend to urge additional sensitive once they reach seniority. They do not need to be dependent to their kids. Moreover, neither do they need to be a burden to their families. Most senior need to feel their presence is appreciated, particularly at the last stages of their lives. Thus, they must not be bereft of this sense.

In conclusion, the benefits of constructing this age an obligatory retirement age out ways that the disadvantages. Therefore, sixty-five years old ought to be created obligatory for retirement. Personally, I suppose that retirement ought to be a voluntary alternative and authorities or employers ought to be there to assist the requirements of staff for them to continue their jobs, rather than discouraging them. An individual is deemed to be happier and glad if he retires in his own can.

Do you ever wonder when is the best time to retire from work? Can you envision yourself sitting in a rocking chair, having idle time and reflecting since the day you were born? Mandatory retirement for workers over the age of 65 is ideal in today’s society. A law that enforces a mandatory retirement will help today’s generation and many more to come in the near future because as workers pass the age of 65, they become no longer physically and mentally capable, their knowledge becomes outdated and they take up most of the jobs causing unemployment.

It is a well-known fact as a person’s age increases, they become no longer physically capable of doing their job. Employees over the age of 65, will have a greater chance of being plagued by many different health problems. As a result, these employees will require to take days off work due to injuries or sickness absence. Jobs that require employees to possess different kinds of skills: precision, hand-steady movements, working under pressure, etc. Clearly, these skills will disappear as a worker’s age increases. Those who have jobs such as surgeons, judges, military personnel, etc. they consequently are endangering not only their lives but the lives around them. These jobs are too dangerous and require high levels of physical and mental skill for a feeble mind and a degrading body.

Aside from being unable to withstand the difficulties of a job. As every aspect of the world steadily changes, the knowledge of people over the age of 65 becomes obsolete. Today, we live in a society where technology is a constant necessity in our daily lives. With technology becoming more advanced in today’s modern world, older employees who have particular jobs such as doctors, surgeons, and military personnel fall behind by not having the knowledge to work this new technological equipment. In addition, teachers are also not benefitting students due to teaching methods being taught which has become outdated. This results in, students not having the opportunity to attend university or have trouble finding a good job in the near-future. As a person age increases, they become more incompetent since they are unable to willingly adapt to current work flow situations since they rely on their knowledge based off the past. This result in poor decision making and also becoming a potential danger to themselves and others.

In Canada, the number of available jobs at any given time is limited for anyone. Some people may disagree with the idea of a mandatory retirement and may say that they need to continue working in order to have money for retirement since the government’s pension plans are not enough to support them during retirement. However, if aging employees are allowed to work as long as they want, adolescents will face a series of unemployment. A fixed mandatory age will provide vacant job positions, allowing young workers to fill in available positions as older works retire. After all, younger workers are much more productive than aged workers. Newer employees will be able to contribute more ideas to a company and inject new life and passion into the workforce. Older workers with decades of experience will demand for far higher salaries. This will ultimately decrease a younger workers salary resulting in an increase in the labor market because companies will have to release some of the young workers or reduce their salary in order to pay older workers without having their company lose profits.

A law that enforces a worker to leave the workforce will protect these workers from their jobs that are physically and mentally demanding. Young adults should not have to deal with useless knowledge as our everyday lives evolve. People that are still working over the age of 65 will create unequal opportunities for young workers, forcing them to remain unemployed while those employees are allowed to continue working, earning high salaries, allowing young workers to suffer in-debt when they could be making a huge impact on society. Retirement should be compulsory at the age of 65, a world with young employees running the workforce will create opportunities for many more generations to come.

In this paper I am going to answer the following question: “What is the difference between pension and retirement?”. But first I have to start with definitions.

Retirement is someone’s withdrawal from active service. In most countries, a worker is said to have retired from service when they have attained a mandatory age or served for a period time in an organization. This age varies from country to country. In the United States, for instance, this age is 62-67, depending on the person’s date of birth. Other countries include: Ukraine – 57-60, Canada/Australia/UK – 65, Italy – 67, and India – 55-60. However, this should not be confused with resignation as workers are made to undergo the compulsory withdrawal from service. Also, when a worker is retired from active service, say in the military, they always receive a particular amount of money for his/her contribution to the organization. The payment could made in two ways: gratuity and pension. However, that is not the case with resignation. When you resign from your job, you rarely get financial compensation. Most times, people are forced to resign from active service for one reason or another other than ages. At some other time, the management may ask a member of the board resign to avoid denting his/her reputation because it is better than being sacked (fired) from work. So, we can see the definition of retirement as the withdrawal from active service as certain conditions have been satisfied not for the wrong reasons. When someone, usually a high-level executive, is forced to set aside for the wrong reason, it is called resignation.

On the other hand, pension is the compensation (usually in form of payment) that a worker receives from the management of his/her organization for attaining a particular age or years of service. In most organizations, including government establishments, people (called retirees) receive an amount of money in appreciation for their contributions to the organization. Apart from organizational setting, pension is also used to designate payment made to a widow or disabled people. Such payments are always made by the government, philanthropist, or community. Thus, the definition of pension is straightforward. s

While pension is a payment made to a widow, retiree or disabled person, retirement is a stage in life when someone has stopped working with an organization. In general, pension is money (compensation), while for retirement is stage of career. Age for both depends on country and organization. And finally, what happens afterwards? Showing appreciation and having a well-deserved rest.

Summarizing, now we have an idea of what the difference between pension and retirement.