My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Wednesday, November 2, 2011

Retirement- Are you a Nevertiree through choice or necessity?

Jim Yih of the Retire Happy Blog has provided me with some pearls of blogging wisdom since I began my blog just over a year ago. Jim dropped one of his pearls of wisdom upon me a while back when he said "Mark, there are very few original ideas to blog about, most have been covered somewhere else”. As I pride myself on creating some original blogs and blog concepts I was shattered. So, when I noticed a trend amongst my clients who had previously told me they planned to retire early, suddenly informing me they had changed their retirement plans and did not intend to retire or only partially retire, I thought I had an original blog in the making. I was going to write on how those who had the means to retire early were now not considering full retirement. I also thought to myself, I would show Jim, I just needed to come up with a pithy concept for this change in retirement philosophy.

As I considered various catchy phrases for this concept, Jim's words came back to haunt me when Michal Nairne the president of Tacita Capital Inc.,a private family office and investment counselling firm in Toronto (that advises some of my clients no less), wrote an article in the Financial Post titled Working to a ripe old age. In his article he discusses how affluent people now see themselves as “Nevertirees” rather than retirees. Wow, not only did he beat me to the punch in writing on the topic, he had come up with a very pithy description of the concept.

I loved the term "Nevertirees" and was about to call Michael to congratulate him on his originality, when in reading his article, I discovered that Barclay's Wealth had either coined the term or used it in their Barclay's Wealth survey that stated that 60% of high net worth individuals in the UK want to keep working and will never retire. Jim should have told me not only are there no original ideas to blog about, but there are no original terms to coin.

Anyways, enough of my ego issues, getting back to the point of this blog, Michael also discussed a Merrill Lynch study that found that Baby Boomers expect to spend a significant portion of their retirement working. This study was however not restricted to high net worth people. These people wanted to work for mental stimulation, but also in many cases needed to continue working for money and health benefits.

The mental stimulation noted in the Merrill Lynch study is a constant reason cited by my clients who have decided to continue working rather than retire. They have read various reports in the media that if they stop working, their odds of dying earlier are higher than those people who continue to work in some capacity. This concept is discussed in a article titled Why retirement is bad for you by Stephen Berglas Ph.D.

However, the ‘keep working to live longer’ mantra has been contradicted by other studies such as this Boeing study by Dr. Sing Lin Ph.D. Since I have no idea which study is right, I just put these studies out there for your consideration.

As briefly noted above, the final reason that the average (non-high net worth) person plans to become a nevertiree is necessity. The weak stock markets, poor employment and business conditions of the last several years have knocked back retirement funds and many potential retirees need a growing pool of capital and not the depleted puddle they have right now. An article by Tavia Grant, published just last week in the Globe and Mail titled Canadians Holding off on Retirement discusses this issue in part.

For whichever of the plethora of reasons noted above, many people do not expect to be sitting back (at least not full-time) and sipping their Pina Colada’s in retirement. They expect, or need, to continue at least part-time work and with the work force shrinking as the baby boomers age, they may have the opportunity to do just that.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.