Benefits January 3, 2012

Living Outside U.S. Could be Answer to Affording Retirement

January 3, 2012 (PLANSPONSOR.com) – New research indicates Americans could retire up to 10 years early and with a higher standard of living if they did so outside of the U.S.
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“Many Americans are wondering when, if ever, they will be able to afford to retire,” said International Living magazine editor, Eoin Bassett. “What they often don’t realize is the low cost of living in countries like Ecuador can open up the door to an early retirement—and a standard of living way beyond what they could afford back home.”

According to InternationalLiving.com’s Retirement Index 2012, Ecuador is the top place to retire due to the low cost of living. In putting together the Index, InternationalLiving.com’s editors collated data from its own team of experts on the ground in the most popular countries among U.S. expat retirees. Index factors ranged from the price of bread and average humidity to utility costs and the friendliness of locals. The information was then used to score each of the top countries out of 100 in categories such as “Real Estate,” “Climate” and “Healthcare.” Ecuador scored well over a number of categories, most notably under “Cost of Living.”

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Internationalliving.com researchers found American retirees living comfortably on extremely low budgets which covered clean, comfortable rental properties; all bills; the cost of running a car and maid services.

Panama, with its pensionado incentive program for retirees, came in second place in the 2012 Retirement Index while Mexico rounded out the top three.

Full details of the InternationalLiving.com Retirement Index 2012 can be viewed at “The World’s Top Retirement Havens in 2012.” 

Benefits January 3, 2012

Retiree Health Benefits Could Encourage Early Retirement

January 3, 2012 (PLANSPONSOR.com) – New research indicates that having employer-sponsored retiree health benefits could encourage workers to retire before age 65. 

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A working paper from the National Bureau of Economic Research (NBER) says its study found retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2%) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2%) increase in the probability of turnover at age 63. It has a more modest effect for individuals under the age of 62.   

According to the paper, a more generous employer contribution of 50% or more raises turnover by one to three percentage points at ages 56-61, by 5.9 percentage points (33.7%) at age 62, and by 6.9 percentage points (43.7%) at age 63. Overall, an employer contribution of 50% or more reduces the total number of person-years worked between ages 56 and 64 by 9.6% relative to no coverage.  

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NBER researchers investigated the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson.  

The working paper is available for purchase ($5 for electronic delivery) at http://www.nber.org/papers/w17703.

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