A shift from pensions to 401(k) plans has made workers responsible for ensuring they have enough money to live on in retirement.
New research shows some Americans who are on the brink of retirement are nowhere close to ready to funding that goal, with almost half of individuals 55 and older having no retirement savings, according to a Senate report released last week.
Most Americans — 79% — now agree there is a retirement crisis, up from 67% in 2020, according to a new report from the National Institute on Retirement Security. Meanwhile, more than half of Americans — 55% — are worried they won’t be able to achieve financial security in retirement.
Younger investors have a unique opportunity to avoid that dilemma, according to experts who testified at a Senate hearing last week.
The reason comes down to compound interest — the money earned on interest — that Albert Einstein reportedly called “the most powerful force in the universe.”
The more time you have to invest toward a goal, the more the money can compound or grow. Investors who start early may need to put down less money than those who begin later to reach a desired amount.
“Starting earlier obviously makes the math work much better,” Dan Doonan, executive director at the National Institute on Retirement Security, said during the Senate hearing.
Proposals to start wealth accumulation earlier
Lawmakers on both sides of the aisle have introduced bills to help make it possible to get started saving for retirement and building wealth earlier.
One bipartisan proposal — the Helping Young Americans Save for Retirement Act — introduced by Sens. Bill Cassidy, R-La., and Tim Kaine, D-Va., would lower the age for young workers to participate in certain workplace retirement plans to 18 from 21, giving them three additional years’ opportunity to save and for interest to compound.
Another bill — the 401Kids Savings Act, led by Democratic Sens. Bob Casey of Pennsylvania, Chuck Schumer of New York and Ron Wyden of Oregon — would create savings accounts for all children starting at birth, with federal support for low- and moderate-income families. Once a child reaches age 18, they would be able to use the funds toward higher education, starting a small business, purchasing a home or retirement.
“Starting to save at birth also means families can put the market to work for them, leading to compound savings and greater assets later in life,” Casey said during the Senate hearing.
By starting from birth, individuals may accumulate almost $473,000 more toward retirement compared with if they started at 32, according to research from the Aspen Institute.
Earlier enrollment in retirement accounts could lead to “huge progress,” noted Eric Stevenson, president of Nationwide Retirement Solutions, who testified at the Senate hearing.
“If we auto-enrolled everyone at age 21 when they graduated from college, we wouldn’t have a crisis,” Stevenson said.
How young investors can get started now
Workers who want to get started investing toward retirement earlier do not necessarily need to wait for new legislation to be passed.
Young individuals of any age who have compensation — such as wages, salary or tips — are eligible to invest inan individual retirement account. Experts are particularly keen on Roth IRAs, which you fund with post-tax dollars, for young workers.
Investors younger than 50 can contribute up to $7,000 to a Roth IRA in 2024. Of note, younger workers with income less than that threshold can only contribute up to the amount they earn. Parents or grandparents who contribute on a young worker’s behalf are also limited to how much the young worker earns.
Opening a Roth IRA early helps start what is known as the five-year rule, when withdrawals from earnings may be taken tax- and penalty-free. To qualify, five years must have elapsed between the tax year of the first Roth IRA contribution and earnings withdrawal. You must also be at least age 59½.
Money contributed to Roth IRAs can always be taken out without penalties.
“The greatest money-making asset any person can possess is time, and young people have more of it than anyone,” Ed Slott, an IRA expert and certified public accountant, previously told CNBC.com.
“They should capitalize on that time,” he added.
Experts who testified at last week’s Senate hearing on retirement agreed.
“We should start with wealth and accumulate it,” said Teresa Ghilarducci, professor of economics at The New School for Social Research and author of the book, “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
