Retirement is a withdrawal from a person's position or job or from an active worker's life. Someone may also be semi-retired by reducing working hours.
More and more people are choosing to postpone this total retirement point, choosing to exist in pre-emerging developing countries.
Many people choose to retire when they qualify for personal or public pension benefits, although some are forced to retire when the condition of the body no longer allows people to work longer hours (due to illness or accident) or as a result of the law regarding their position. In most countries, the notion of retirement is a recent origin, introduced in the late nineteenth and early twentieth centuries. Previously, low life expectancy and the absence of a pension arrangement meant that most workers continued to work to death. Germany was the first country to introduce retirement benefits in 1889.
Currently, most developed countries have a system to provide pensions in retirement in old age, which may be sponsored by employers or countries. In many poor countries, support for the old is still largely provided through the family. Today, retirement with retirement is considered the right of workers in many societies, and fierce ideological, social, cultural and political struggles have been championed whether this is a right. In many western countries this right is mentioned in the national constitution.
Video Retirement
History
Retirement, or the practice of leaving someone's job or stopping working after reaching a certain age, has been around since around the 18th century. Before the 18th century, the average life expectancy of people was between 26 and 40 years. Because of this, only a small percentage of the population reaches an age where physical impairment begins to become an obstacle to work. Retirement as a government policy began to be adopted by countries during the late 19th century and the 20th century, beginning in Germany under Otto Von Bismarck.
Maps Retirement
In certain countries
A person can retire at whatever age they like. However, state tax laws or old-age pension rules usually mean that in certain countries a certain age is considered a "standard" retirement age.
The "standard" retirement age varies from country to country but is generally between 50 and 70 (according to the latest statistics, 2011). In some countries, this age is different for men and women, although this has recently been challenged in some countries (eg, Austria), and in some countries, age has been at stake. The table below shows the variations in age eligibility for public old age benefits in the United States and many European countries, according to the OECD.
Note: Parentheses indicate age eligibility for women when different. Source: Cols. 1-2: OECD Retirement at a Glance (2005), Cols. 3-6: Tabulation of HRS, ELSA, and SHARE. Box brackets indicate early retirement for some public employees.
1 In Denmark, early retirement is called efterlÃÆ'¸n and there are several requirements that must be met. The age of early and normal retirement depends on the day of birth of the person applying for retirement.
2 In France, retirement age has been extended to 62 and 67 respectively, over the next eight years.
3 In Latvia, the retirement age depends on the day of birth of the person applying for retirement.
4 In Spain, retirement age will be extended to 63 and 67 respectively, this increase will progress from 2013 to 2027 at 1 month level for the first 6 years and 2 months for the rest 9.
In the United States, while the normal retirement age for Social Security, or Old Age Elderly Insurance (OASI), has historically been 65 years old to receive unreduced benefits, gradually increasing to 67 years of age. For those aged 65 years in 2008, the full benefits will be paid from the age of 66 years. Civil servants are often not covered by Social Security but have their own pension plans. Police officers in the United States are usually allowed to retire with half the salary after only 20 years of service or pay three quarters after 30 years, allowing people to retire in the early forties or fifties. Military members of the US Armed Forces may choose to retire after 20 years of active duty. Their pension payments (not pensions as they can be voluntarily recalled to active duty at all times) are calculated in the total number of years on active duty, their final salary value and pension system in place when they enter service. Benefits like housing and subsistence are not used to calculate the salaries of retired members. Members who are awarded the Medal of Honor are eligible for separate pay, regardless of length of service. Military members in the US National Reserve and Guard have retirement under the points system.
Data set
Recent advances in data collection have greatly enhanced our ability to understand the important relationships between retirement and factors such as health, wealth, work characteristics and family dynamics, among others. The most prominent study to examine retirement behavior in the United States is the ongoing Health and Retiree Study (HRS), first fielded in 1992. HRS is a longitudinal survey of adult national representatives in the US age 51, conducted every two years, and contains a wealth of information on topics such as labor force participation (eg, current employment, employment history, pension plans, industry/employment, pensions, disabilities), health (eg health and history status, health and life insurance, cognition), financial variables for example, assets and income, housing, net worth, will, consumption and savings), family characteristics (eg, family structure, transfer, parent/child/grandfather/brother information) and a host of other topics (eg expectations, spending, , risk taking, psychosocial, time use).
2002 and 2004 saw the introduction of the English Longitudinal Study of Aging (ELSA) and the European Health, Aging and Retirement Survey (SHARE), which included respondents from 14 continental European countries plus Israel. The survey was closely modeled after HRS in the sample, design and content framework. A number of other countries (eg, Japan, South Korea) are also now following a similar survey of HRS, and others (eg, China, India) are currently conducting a pilot study. This data set has expanded the ability of researchers to examine the question of retirement behavior by adding a cross-national perspective.
Note: MHAS was discontinued in 2003; ELSA numbers do not include institutionalized (nursing home). Source: Borsch-Supan et al., Eds. (November 2008). Health, Aging and Retirement in Europe (2004-2007): Starting the Longitudinal Dimension.
Factors that affect decisions
Many factors influence people's retirement decisions. Retirement education is a major factor affecting the success of individual retirement experiences. Social Security obviously plays an important role because most individuals rely solely on Social Security as their only retirement option, when both Social Security trust funds are expected to be exhausted by 2034. Knowledge affects individual retirement decisions by only finding more reliable pension options such as, Account Individual Retirement or Corporate Granting Plan. In countries around the world, people are much more likely to retire at the early and normal retirement age of the public pension system (eg, age 62 and 65 in the US). This pattern can not be accounted for by different financial incentives for retirement at this age because the pension benefit at this age is approximately equitably actuarial; that is, the present value of a lifetime pension benefit (pension wealth) depends on retirement at a approximately equal to pension wealth depending on pension one year later at age a 1 However, much of the literature has found that individuals respond significantly to pension-related financial incentives (eg, on discontinuities derived from Social Security earnings tests or tax systems).
Greater wealth tends to lead to early retirement, because rich people can basically "buy" additional free time. Generally the effect of wealth on retirement is difficult to estimate empirically because observing greater wealth at older ages may be a result of increased savings over working life in anticipation of early retirement. However, some economists have found creative ways to estimate the effects of wealth on retirement and usually find that they are small. For example, one paper exploits inheritance receipts to measure the effect of wealth shocks on retirement using data from HRS. The authors found that receiving inheritance increases the probability of retirement earlier than expected by 4.4 percentage points, or 12 percent relative to early retirement rates, over a period of eight years.
A lot of attention has surrounded how the Financial crisis of 2007-2008 and the Great Recession next influenced retirement decisions, with conventional wisdom saying that fewer people will retire because their savings have run out; But recent research shows that the opposite is possible. Using data from HRS, researchers examined trends in defined benefits (DB) versus defined contribution pension funds (DC) and found that those approaching retirement had only limited exposure to recent stock market declines and thus may not substantially delay the their retirement. At the same time, using data from the Current Population Survey (CPS), another study estimates that mass layoffs tend to lead to a pension increase of almost 50% greater than the decline caused by stock market crashes, resulting in net retirement likely to increase in response to crisis.
More information tells how many retirees will continue to work, but not in the careers they have for most of their lives. The job opening will increase in the next 5 years due to the resignation of the baby boomer generation. More than 50 inhabitants are actually the fastest-growing labor groups in the US.
Many studies have examined the effects of health status and health shocks on retirement. It is widely found that individuals in poor health generally retire earlier than those who are in better health. This does not necessarily mean that poor health status causes people to retire early, because in retired surveys it may be more likely to exaggerate their poor health status to justify their previous decision to retire. The bias of this justification, however, tends to be small. In general, health decline over time, as well as the emergence of new health conditions, have been found to be positively associated with early retirement. Health conditions that can cause a person to retire include hypertension, diabetes mellitus, sleep apnea, joint disease, and hyperlipidemia.
Most people get married when they reach retirement age; Thus, the employment status of a spouse may affect a person's decision to retire. On average, husbands are three years older than their wives in the US, and couples often coordinate their retirement decisions. Thus, men are more likely to retire if their wives are also retired than if they were still in the labor force, and vice versa.
EU member countries
Retired workers support themselves either through retirement or savings. In many cases, money is provided by the government, but sometimes it is only given by private subscriptions to mutual funds. In this latter case, the subscription may be mandatory or voluntary. In some countries, additional "bonuses" are given una tantum (only once) in proportion to year of work and average wage; this is usually provided by the employer.
The financial burden of providing pension funds to the government budget is often severe and is the reason for the political debate about retirement age. The state may be interested in retirement age later for economic reasons.
The cost of health care in retirement is enormous because people tend to get sick more often in the future. Most countries provide universal health insurance coverage for seniors, although in the United States many people retire before they qualify for Medicare at age 65. In 2006, Medicare Part D went into effect in the United States, extending the benefits to include the coverage of prescribed medications.
A poll conducted in Washington says many people do not realize that "medicare does not pay for the most common type of long-term care" (Neergaard); 37 percent of Americans who took the survey believed that it did not cover it. Medicaid is a federal state program for people in need and the primary source used to pay for their long-term care.
Overall, post-retirement income can come from state pensions, employment pensions, personal savings and investments (private pension funds, owned housing), donations (for example, by children), and social benefits. On a personal level, the rising cost of living during retirement is a serious problem for many older adults. The cost of health care plays an important role.
Calculator
A useful and straightforward calculation can be done if we assume that interest, after expenditure, taxes, and inflation is zero. Assume that in real (after-inflation) terms, your salary never changes during the w years of your working life. During p your retirement year, you have a standard of living that requires a R replacement rate as much as your standard of living in your working life. The standard of your working life is your salary minus the proportion of Z salary you need to keep. The calculation is per unit of salary (eg, Assume salary = 1).
Then after w years of work, retirement age collects savings = wZ . To pay pensions during p years, the required savings when retiring = Rp (1-Z)
Customize this: wZ = Rp ( 1-Z ) and solve it to give Z = Rp /( w $ ). For example, if w = 35, p = 30 and R = 0.65 we find that we need to keep the proportion Z = 35.78% of our salary.
Pension calculators generally collect the proportion of salary until retirement age. This suggests a straightforward case, which, though practically, can be useful for optimistic people who wish to work only as long as they may have retired. References relevant to the real interest zero assumption are listed here
For more complicated situations, there are some online retirement calculators on the Internet. Many retired calculators project how much investors need to save, and for how long, to provide a certain level of pension funds. Some retirement calculators, which are suitable for safe investments, assume a constant and unchanging rate of return. Monte Carlo's pension calculator takes into account volatility and projects the probability that the specific plans for retirement savings, investments and spending will last longer than pensions. Pension calculators vary in terms of where they take taxes, social security, pensions, and sources of retirement income and expenses into accounts.
The assumptions included in the pension calculator are very important. One of the most important assumptions is the assumption of real investment returns (after inflation). A conservative estimate of return can be based on the real yields of Index-Inflation bonds offered by several governments, including the United States, Canada, and the United Kingdom. The TIP $ TER pension calculator projects a retirement expenditure that the bond portfolio associated with inflation, coupled with other income sources such as Social Security, will be able to survive. Current results in United States Treasury Inflation Protected Securities (TIPS) are available on the US Treasury website. Current results in Canada's Real Return Bonds are available on the Bank of Canada website. As of December 2011, US Treasury bond-related bonds (TIPS) generated about 0.8% real per annum for a maturity of 30 years and real earnings were slightly negative for a 7-year maturity.
Many people use "retirement calculators" on the Internet to determine the proportion of their salary, they must save in a tax-advantaged plan (for example, IRA or 401-K in the US, RRSP in Canada, private pensions in the UK, pensions in Australia). After spending and taxes, a reasonable long-term (though arguably pessimistic) long-term assumption for a real safe return is zero. So, in real terms, interest does not help to grow savings. Each year of work must pay its share of one year retirement. For someone who plans to work for 40 years and retire for 20 years, each year's work pays for themselves and for half a year retires. Therefore, 33.33% of payments should be kept, and 66.67% can be spent when received. After 40 years saving 33.33% of payments, we have accumulated 13.33 years of asset payments, as in the graph. In the graph to the right, the straight line, which corresponds to the assumption of return of investment is real zero.
The graph above can be compared to that generated by many pension calculators. However, most retirement calculators use nominal (not "real" dollars) and therefore require projections of both expected inflation rates and expected nominal returns. One way to overcome this limitation is, for example, enter the input "0% return, 0% inflation" into the calculator. Bloomberg's pension calculator provides the flexibility to determine, for example, zero inflation and zero return on investment and to reproduce the chart above. MSN's pension calculator in 2011 has a standard 3% inflation rate per year and an 8% optimistic return assumption; consistency with US nominal bonds in December 2011 and inflation-protected bond market rates require a change to about 3% inflation and 4% return on investment before and after retirement.
Ignoring taxes, someone who wants to work for a year and then relax for a year with the same standard of living needs to save 50% of salary. Similarly, a person who wants to work from 25 to 55 years of age and retires for 30 years to 85 needs to save 50% of salary if government and employment pensions are not a factor and if it is considered appropriate to assume zero real investment returns. The problem that age is not known before can be reduced in some countries with purchases at retirement from life annuities indexed by inflation.
The required lump sum size
To pay for your pension, it is assumed for simplicity to be received at the end of each year, and taking the discounted values ​​by way of calculating the net present value, you need a certain amount of money available upon retirement from:
(1 - < prop ) R repl S {(1 i real ) -1 (1 i real ) -2 ....... (1 i real ) -p } = (1-z prop ) R repl S {(1 - (1 i real ) -p )/i real }
Above, we have used the standard mathematical formula for the sum of geometric series. (Or if I real = 0 then the series in brackets the number to p because then have the same term). For example, assume that S = 60,000 per year and that it is desirable to replace R repl = 0.80, or 80%, of the standard pre-retirement life for p = 30 years. Assume for the current purpose that the proportion z prop = 0.25 (25%) of the payment has been saved. By using i real = 0.02, or 2% per year real return on investment, the amount of lump sum required is given by the formula as (1-0.25) * 0.80 * 60,000 * annuity-series-sum (30) = 36,000 * 22,396 = 806,272 in the nation's currency in the period 2008-2010. To allow for inflation directly, it is best to talk about 806,272 as "1343 years of retirement age retirement". It may be appropriate to consider this as a lump sum needed to fund 36,000 annual supplements for each company or government pension available. It is common to not include any home value in calculating this required lump sum, so for homeowners, payments are at the same time a non-housing living expense. The size of the lump sum is saved
Have you saved enough to retire? Use the necessary but unrealistic assumption of the interest rate after a constant payment. In retirement you have accumulated
z prop S {(1 i rail to pay ) w-1 (1 i rail to pay ) < soup> w-2 ....... (1 my rail to pay ) 1}
(<1> w - 1)/i r to pay >
Equalize and get the required saving proportions
To make an accumulation in accordance with the amount of money needed to pay for your pension:
z w - 1)/i r to pay (<1) = (1-z prop ) R replica S (1 - ((1 i real )) -p )/i real
Take z prop to the left to provide our answer, under this rough and unsecured method, for the proportion of payments we have to deposit:
z prop = R replica (1 - ((1 i real )) -p )/i real /[(((1 i rail to pay )) w - 1)/i rails to pay R replica (1 - ((1 i real )) -p )/i real (Ret-03)
Note that the special case i rail to pay = 0 = i real means that we instead add up the geometric series by noting that we have p or w identical terms and hence z prop = p/(wp). This corresponds to our chart above with the straight-line real-terms accumulation.
Examples of results
The results of z prop given by (Ret-03) are highly dependent on the assumptions you make. For example, you can assume that price inflation will be 3.5% per annum forever and that your payments will increase only at the same rate of 3.5%. If you assume a nominal interest rate of 4.5% per annum, then (using 1,045/1,035 in real terms) your pre-pension and post-retirement net interest rates will remain the same, I rail to pay = 0.966 percent per year and i real <= 0.966 percent per year. This assumption may make sense given the market returns available on inflation index bonds, after fees and taxes. The equation (Ret-03) is easily coded in Excel and with these assumptions gives the required saving rate in the attached picture. Monte Carlo: better allowance for randomness
Finally, a newer method for determining the adequacy of retirement plans is the Monte Carlo simulation. This method has gained popularity and is now used by many financial planners. Monte Carlo pension calculator allows users to enter savings, income and expense information and run a pension scenario simulation. Simulation results show the possibility that the pension plan will be successful.
Start
Retirement is generally considered "early" it occurs before the age (or ownership) is necessary for eligibility for support and funding from government or sources provided by the employer. Early retirees typically rely on their own savings and investments to become independent, either indefinitely or until they start receiving external support. Early retirement can also be used as an euphemistic term for being fired from work before typical retirement age.
Savings required
While conventional wisdom says that a person can retire and take 7% or more from a portfolio year after year, this strategy will not often succeed in the past.
The graph on the right shows a year-on-year portfolio balance after taking $ 35,000 (and adjusted for inflation) from a portfolio of $ 750,000 annually for 30 years, starting in 1973 (red line), 1974 (blue line), or 1975 (line green). While overall market conditions and inflation affect these three things (since all three experienced the same conditions between 1975 and 2003), the chances of making those funds last for 30 years depend heavily on what happens to the stock market in the first year. several years.
Those who are contemplating early retirement will want to know if they have enough to survive the bear market that may be like that will cause the retirement pension of the 1973 retiree to be exhausted after only 20 years.
The history of the US stock market shows that one should live about 4% of the initial portfolio per year to ensure that the portfolio does not run out before retirement ends; This rule of thumb is a summary of one of the conclusions of the Trinity study, although the report is more nuanced and its conclusions and approach are severely criticized (see Trinity's study for details). This allows to increase withdrawal with inflation to maintain consistent spending capabilities throughout retirement, and to continue withdrawing even in dramatic and prolonged bear markets. (Figures 4% do not assume pensions or changes in spending levels during retirement.)
When retired before the age of 59 1 / 2 , there is a 10% IRS penalty on withdrawal from a retirement plan such as 401 (k) or Traditional IRA. Exceptions apply under certain conditions. At the age of 59 and six months, the penalty-free status is reached and the IRS 10% penalty is no longer valid.
To avoid a 10% penalty before the age of 59 1 / 2 , someone should consult a lawyer about using IRS 72 rules Q. This rule should be applied with the IRS. This allows the distribution of IRA accounts before the age of 59 1 / 2 in the same amount of a good 5-year period or until age 59 1 / 2 , which is the longest time period, with no 10% penalty. Fixed taxes must be paid on distribution. Calculations using actual numbers
Although the 4% early withdrawal rate portfolio described above can be used as a rough gauge, it is often desirable to use retirement planning tools that receive detailed input and can produce more precise results. Some of these tools are just models of the retirement phase of the plan while others can model either the savings or accumulation phases as well as the retirement phase of the plan. For example, the analysis by Forbes predicts that in 90% of the historical market, the 4% rate will last at least 30 years, while in 50% of the historical market, the 4% rate will have been maintained for more than 40 years.
The effects of inflation-adjusted withdrawals from a given initial portfolio can be modeled with a downloadable spreadsheet that uses stock market historical data to estimate the possibility of portfolio returns. Another approach is to use a retirement calculator that also uses historical capital market modeling, but adds provisions for combining pensions, other retirement income, and changes in spending that may occur during retirement.
Life after
Retirement may coincide with important life changes; retired workers may move to new locations, such as retired communities, thus less likely to come into contact with their previous social context and adopt new lifestyles. Often retired volunteers for charities and other community organizations. Tourism is a common marker of retirement and for some people a way of life, like so-called gray nomads. Some retired people even choose to go and live in a warm climate in what is known as retirement migration.
It has been found that Americans have six lifestyle choices as they age: continue working full-time, continue to work part-time, retire from work and become involved in various leisure activities, retire from work and become involved in various recreational and recreational activities, retirement from work and then go back to work part-time, and retire from work and then go back to work full-time. An important note to take from this definition of lifestyle is that four of the six things involve work. America is facing an important demographic change because Baby Boomer's generation is now retirement age. This raises two challenges: will there be a sufficient number of skilled workers in the workforce, and whether the current pension plan will be sufficient to support an ever-increasing number of retirees. The reason that some people choose never to retire, or to return to work after retirement includes not only the difficulties of planning pensions but also wages and benefits, physical and mental energy expenditures, production of goods and services, social interactions, and social status can interact to influence participation decisions the individual workforce.
Often pensioners are called to care for grandchildren and sometimes elderly parents. For many people give them more time to devote their hobbies or sports like golf or sailing. On the other hand, many retirees feel restless and suffer from depression as a result of their new situation. While it is impossible scientifically to directly point out that pensions either cause or contribute to depression, newly retired people are one of the most vulnerable groups of people when it comes to depression most likely due to meeting age and worsening health status. Retirement coincides with the deterioration of a person's health that correlates with age and this is likely to play a major role in increasing depression rates in retirees. Longitudinal and cross-sectional studies have shown that healthy parents and retired people are equally happy or happy and have the same quality of life as their age compared to younger adults who work, therefore retiring in and of themselves may not contribute to the development of depression.
Many people in the last years of their lives, because of failing health, need help, sometimes with very expensive care - in some countries - are provided in nursing homes. Those who need care, but do not need continuous help, can choose to stay in nursing homes.
See also
- Simple life
- Go down (lifestyle)
- Retired
- Aging
- Mandatory retirement
- Gerontology
- Social security
- Retirement earnings are down
- Asset/liability modeling
- LGBT retirement issues
References
Further reading
- Schultz, Ellen E., HEAD SAFETY: How The Firm Snatches and Benefits from an American Worker's Nest Egg ", Penguin Publishing, 2011
- Robert A. Stebbins (2013). Planning Your Time in Retirement: How to Grow Lifestyle Style in accordance with Your Needs and Interests . Lanham, MD: Rowman & amp; Littlefield Publisher. ISBN: 978-1-4422-2160-4.
- Jamie P. Hopkins; David A. Littell; Kenn Beam Tacchino (July 2015). Planning for Retirement Needs, Third Edition . American College. ISBN 978-1-58293-230-9.
External links
- "Retired Simulation",
- "Historical Development", Social Security Administration
- Short, Joanna, "History of Retirement Economics in the US", 2010-02-01, Augustana College, Rock Island, Illinois
Source of the article : Wikipedia
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