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Retire?! In This Economy?!

Retire?! In This Economy?!

Released Saturday, 4th May 2024
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Retire?! In This Economy?!

Retire?! In This Economy?!

Retire?! In This Economy?!

Retire?! In This Economy?!

Saturday, 4th May 2024
Good episode? Give it some love!
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Episode Transcript

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0:01

In 2007, TV network CBS

0:03

dropped 40 kids

0:05

in the middle of the New Mexico desert as

0:07

part of a brand new reality show. These kids

0:09

would have to build their own society from scratch.

0:11

And if this sounds like Lord of the Flies

0:14

to you, well, it was meant to. We

0:16

were on this mission together. We were going to prove

0:18

to the world that we could make a better society

0:21

than adults could. I'm Josh

0:23

Gwynn, and I want to know

0:25

what this wild TV experiment was

0:27

really about. Splitscreen Kid

0:30

Nation, a six part podcast

0:32

from CBC, available now.

0:37

Frequency Podcast Network, stories

0:39

that matter, podcasts that resonate. I

0:43

often say that I love this job.

0:46

It's the best job I've ever had, and I

0:48

would have no problem doing it

0:50

until I die. Which

0:53

I might have to. And

0:55

you might have to do yours till you die, too.

0:59

The concept of retiring at 65 to

1:01

live out our years in

1:03

leisure and relaxation, that's

1:05

an option afforded to fewer and fewer

1:08

people. And among those just

1:10

starting out in their working lives, people

1:12

who are taking on debt to afford

1:14

everything or barely keeping their heads above

1:16

water, saving anything for

1:18

retirement can feel like

1:21

a total impossibility. So

1:24

is it? It's this week

1:27

on In This Economy. Freedom

1:45

55. There are

1:47

a lot of things about that classic

1:49

80s commercial that did not age well.

1:53

Primarily, the fact that for

1:55

most of the kids who happened to watch it

1:57

on TV back in the day, it's turned

2:00

out to be a big lie.

2:06

Many of us who are now

2:08

approaching that apocryphal age of 55

2:11

would grow up to worry that

2:13

not only would they not be

2:15

able to retire by 55 but,

2:18

in this economy, are

2:20

worried we might not be able

2:22

to retire at all. I'm

2:30

Jordan Heath-Rollings and you are listening

2:32

to In This Economy, where

2:34

we help you understand the

2:36

systems that create your money problems, from

2:39

grocery bills to pension plans

2:42

to never stopping working until

2:44

you die and everything in

2:46

between. In

2:48

each episode, we hear from a

2:50

listener who is facing a financial

2:52

challenge and then I talk to

2:55

an expert who can explain the

2:57

factors causing that problem and offer,

2:59

if not perfect, solutions than

3:01

pivots or options, things you can

3:04

do even in

3:06

this economy. A

3:10

listener named Brian recently wrote in with

3:12

a question that is probably on a

3:14

lot of people's minds. Here's

3:17

what he said. Hello!

3:21

Love the podcast. At 44

3:23

and as either the youngest Gen X

3:25

or the oldest Millennial, depending on the

3:28

source, I've been almost

3:30

subconsciously paying more attention to

3:33

the doom and gloom articles

3:35

regarding retirement in Canada. Is

3:38

it even possible to retire and what

3:40

does an alternative retirement even look like?

3:47

Brian's email included a link to a

3:49

Daily Hive article that cites a Reddit

3:51

thread where someone posed

3:53

the question... 65.

4:01

A lot of folks on that thread wade

4:04

in with what I would

4:06

call bleak responses. 65.

4:10

I'll be lucky if I can retire at 95. I'm

4:13

42. At my current

4:15

trajectory, I can expect to retire comfortably at

4:17

age 275. I

4:21

swear, I'm gonna work until 12 p.m.

4:23

on the date of my funeral. Retirement

4:25

is now only a thing for the rich. So,

4:29

we wanted to find out more about

4:32

how attitudes towards retirement have been changing

4:34

over the years. And

4:36

if, rather than either

4:39

retire or not

4:41

ever retire, there might

4:43

be a better way. So

4:46

we reached out to Alyssa Briarly.

4:49

She is the executive director of

4:52

the National Institute on Aging at

4:54

Toronto Metropolitan University. She

4:56

co-authored their annual report, Perspectives

4:59

on Growing Older in Canada.

5:03

Alyssa, I will be blunt off the top.

5:06

Are millennial Canadians gonna be able to

5:08

retire, like most of them even? I

5:12

think so. I mean, it's something that

5:14

I think about myself because I fall

5:16

into that age cohort as

5:18

well. I think your listener question identified themselves

5:21

as a 44-year-old, and that's

5:23

the age that I am at right now. So I'm thinking

5:25

about these things myself. But yes,

5:27

I think retirement is absolutely in the

5:29

cards for people. They just need to

5:31

be thoughtful and plan for it. It's

5:34

a major financial undertaking and a shift

5:36

into a different phase of life. So

5:38

it just requires careful planning. What

5:40

will that retirement look like maybe

5:42

compared to what our

5:44

parents or their parents were used to since

5:47

the rise of the unions, I guess, when

5:49

it seemed to be like 65 and you're

5:51

good and maybe even if you work hard

5:53

55 and you're off to the golf

5:55

course? I think certainly the

5:57

concept of retirement has evolved.

6:00

and is continuing to

6:02

evolve significantly. The

6:04

traditional concept of retirement, where you get

6:06

to age 65 and go sip cocktails

6:08

on the beach is not

6:11

really realistic for people. We live

6:13

too long for that, frankly. The average life expectancy

6:15

is 79 for men and

6:18

close to 84 for women. So

6:20

it's not terribly surprising, given

6:22

the major changes to longevity that

6:25

we've seen over the last century

6:27

that our views on retirement are

6:29

evolving. I think at

6:31

a high level, it doesn't look like

6:33

what it looked like for our parents necessarily,

6:36

but it's also the case that that's

6:38

not necessarily what people want anymore. A

6:40

lot of people, according to Stats Canada,

6:42

want to continue doing some kind of

6:45

work well beyond the traditional retirement age.

6:47

And the majority of people planning to

6:50

retire would continue working longer if they

6:52

could reduce their hours and their stress.

6:55

So when you talk to Canadians, what

6:57

are the concerns they have as they

6:59

age and look towards retirement? Just saying

7:02

I can't afford it is a very

7:04

broad statement. What are they really worried

7:06

about? So the major concerns that Canadians

7:08

have as they age and they look to

7:10

retirement, they are primarily financial in nature. So

7:13

in particular, we heard that Canadians

7:16

are concerned about the impact of

7:18

inflation, the fear of running

7:20

out of money in retirement, as

7:22

well as the cost of care that they might

7:24

need as they age, including long-term care. And I

7:26

can break all that down a little bit if

7:29

it's helpful. Sure. In our survey,

7:31

we asked Canadians over 50 who

7:33

haven't yet retired if they felt financially

7:35

prepared to retire when they want to.

7:38

And only 35% of working Canadians

7:40

50 and over who intend to retire

7:42

said that they could afford to do so at

7:44

their desired time. 39%

7:47

said that they're not in the financial position to do so.

7:50

And 26% said that they were unsure of

7:52

whether they could afford to retire at their

7:54

desired time. So I'll caveat

7:56

all of that by saying that we

7:58

don't know why. people feel that way. It could

8:01

be that they have money, but they're not sure if

8:03

they have enough. It could be

8:06

that they have money, but they're more aware

8:08

of and concerned about the cost of aging.

8:10

It could be that they aren't

8:12

sure how to manage their money when they do

8:14

retire. So just on that note, for

8:17

people who have defined benefit pension plans,

8:19

they don't have to worry about managing

8:21

their money in retirement because the pension plan

8:23

does that for them and guarantees

8:26

an income for life. But that's

8:28

not the case for people with

8:30

retirement savings in other types of

8:32

vehicles like defined contribution pension plans

8:34

or RSPs or TFSAs. So it's

8:37

a little bit more precarious for those folks in

8:39

terms of managing their money. But

8:41

in addition to asking that

8:43

sort of broad question, we also

8:45

identified nine future financial

8:48

concerns and asked Canadians 50 and

8:51

over to identify which ones were

8:53

of concern to them when they thought about their future.

8:56

And not surprisingly, given the economic trends

8:58

in recent years, inflation is a top

9:00

concern for people with the rising cost

9:03

of living named as the top concern,

9:05

followed by running out of money. And

9:08

then other issues that were identified include possible

9:11

reduction in government benefits and

9:14

not being able to afford major medical

9:16

or long-term care expenses. One

9:18

of the things you mentioned was their

9:21

money not lasting. This is a question

9:23

that I've got myself, which is given

9:25

the volatility that we've seen in the

9:28

economy the past few years, how do

9:30

you look at how much you'll need

9:32

to save for retirement and

9:34

trust it when we see the

9:37

cost of everything, especially housing,

9:39

can skyrocket so quickly? Yeah,

9:41

that's a great question. And I think

9:44

just at a high level when people

9:46

are planning for retirement, they need to

9:48

keep in mind that they're

9:50

living longer lives. They're in

9:52

an environment of less secure

9:55

retirement income from workplace

9:57

pension plans. They're lower

9:59

anticipated. financial market returns

10:01

and higher projected costs for things

10:04

like health care and caregiving support.

10:06

So there really is a lot to

10:08

think about. We're often asked if

10:10

there's sort of a number or a target

10:12

or a sort of a magic number. I

10:15

was going to ask you that myself. Yes, it's a very

10:17

common question that people need to

10:20

retire comfortably and unfortunately, you

10:22

know, there really isn't a magic number. People

10:24

need to understand what their expenses are and prepare

10:27

for those costs. So maybe I'll talk a little

10:29

bit about that if it's helpful. Yeah. So

10:32

just off the top, only about a

10:34

third of working Canadians have some form

10:36

of workplace pension coverage. And we

10:39

do have Canada's retirement income system,

10:41

which provides all older Canadians with

10:43

a base level of retirement income.

10:46

But for most people, it doesn't provide

10:48

enough money to fully cover living expenses

10:51

and unexpected costs. So that's something that's

10:53

really important for people to keep in

10:55

mind. Mm-hmm. What your expenses

10:57

will look like really depends

10:59

on a number of different factors that

11:01

are all really quite personal to the

11:03

individual. So, you know, what

11:05

do you want your life to be like when you retire?

11:07

What does comfortable mean to you? Where do

11:09

you live? What is your health status?

11:12

Do you have a solid network of friends and

11:14

family who can help you out if you need

11:16

help? You know, what assets do you

11:18

have? Do you own a home? So

11:21

it's really important for people to understand what

11:23

their expenses might look like when they retire. And

11:25

in addition, there's a couple of other things to

11:27

keep in mind. First of

11:30

all, your expenses today may not

11:32

necessarily be your expenses tomorrow. Right.

11:35

And there's also a common misperception out

11:37

there that when you're looking at financing

11:39

your retirement, you'll spend most of your

11:41

money upfront on things like traveling and

11:43

living your best life. But

11:45

the reality is that the cost of

11:47

aging can be significant and those costs

11:49

tend to increase as we age as

11:51

people need more care and support. So,

11:55

you Know, many people think that their expenses will

11:57

go down when they retire because they don't. A

12:00

mortgage which is is one thing to

12:03

think about but as people a health

12:05

care expenses and to increase this can

12:07

include a no health insurance premium that

12:09

people will third to have to pay

12:12

out of pocket after they retire because

12:14

they don't have an employer paying for

12:16

that are deductible copayments for health expenses,

12:19

prescription drugs, central vision, long term care,

12:21

etc. Mind. When. It comes

12:23

to care traditionally and have seen

12:25

today is adult children who are

12:27

providing the majority of chair at

12:29

home for Canadian. The three out

12:31

of every four hours of care

12:33

is being done by people that

12:35

all children. So if you

12:38

don't have children, are you have a smaller family

12:40

or your family doesn't live close to you? you

12:42

may not be able to rely on that anti

12:44

terror and have to pay for that out of

12:46

pocket. And. The average cost

12:49

of private and home care services can

12:51

range anywhere from a thousand dollars to

12:53

thirty five hundred dollars per month. But.

12:56

Forty nine percent of Canadians who are forty

12:58

five years and older believe that the in

13:00

home care for themselves or a loved one

13:03

would cost less than eleven hundred dollars a

13:05

month has a huge disconnect between what people

13:07

to actual care costs are and what they

13:10

think they will be. In addition

13:12

to the care needs as people age. They

13:14

might need assistance and support with

13:16

what we call activities of daily

13:18

living. So things like snow removal,

13:20

gardening, and cleaning. The author needs

13:23

to think about how maintenance and

13:25

renovation. Because we know that

13:27

virtually all Canadians want to eat in

13:29

their homes as opposed to move into

13:32

institutional care settings. But in order for

13:34

that to be a reality, people need

13:36

a plan for expenses, serenity, their homes

13:39

and and make modifications for accessibility and

13:41

to a comedy eating in place. And.

13:44

then going back to housing which is where

13:46

i started people think expenses go down when

13:48

you retire because they sort of assume that

13:50

many people no longer have a mortgage but

13:52

if you're a renter that assumption go at

13:54

the window was entirely if you're a renter

13:57

housing will be one of your biggest costs

13:59

and i imagine your listeners are likely quite

14:01

attuned to the high cost of rental housing

14:03

in Canada with our record low

14:05

vacancy rates and record high rents. So

14:08

let me ask you this then because, and

14:10

I swear I'm not trying to be dour

14:12

here, but you've not made retirement sound like

14:15

living my best life traveling the world. Is

14:18

how we think about retirement changing?

14:20

You kind of touched on this

14:22

a little bit off the top,

14:24

but if we're looking at saving

14:27

for retirement and I'm listening

14:29

to you and taking into consideration all

14:31

of those things, I'm not actually

14:33

thinking that I'm going to be lying on

14:35

a beach somewhere sipping a margarita. I'm going

14:37

to be worried about affording my house, affording

14:39

my medical care. Why would

14:41

I want to retire? That's

14:45

a great question. I

14:47

certainly don't mean to paint an

14:50

impossible picture of retirement for

14:52

people, but I do think it

14:55

is important that people understand and

14:57

are realistic about what

14:59

the cost of getting older entails so

15:01

that they can plan for them and

15:04

enable the kind of retirement that they

15:06

want to have. A lot of people

15:09

find themselves thinking about these

15:11

things later than they should be. So

15:13

it's really important that people start thinking about

15:15

and planning for retirement sooner

15:17

rather than later if that's what they want

15:19

to do. So doing things like

15:21

taking steps to improve their financial

15:24

literacy and educate themselves, learn

15:26

and read and think about what their expenses

15:29

will be while they're older and not

15:31

make assumptions about what that looks like.

15:33

But as I was saying earlier,

15:36

to your point, our concept of retirement

15:38

has changed over the years. There are a lot

15:41

of folks who want to

15:43

continue doing some kind of work

15:45

well beyond the traditional retirement age

15:48

if they could reduce their hours

15:50

and their stress. Some

15:52

of the reasons why they're working

15:54

longer are due to financial need,

15:56

unfortunately. And also some people don't

15:58

have adequate retirement. The Bank or

16:00

they probably want to supplement their retirement

16:03

income and we think you know under

16:05

the circumstances that this trend it is

16:07

likely to increase given what we've seen

16:09

in the results of our annual survey.

16:11

But there is also. A segment of

16:13

the population of older adults who wants

16:16

to continue working because they're healthier and.

16:18

More. Active and me into a contributing

16:20

and the enjoy the social interaction and

16:22

the routine of working and we've also

16:24

from new phone or the biggest structural

16:26

barriers to working later in life which

16:29

is the elimination of mandatory retirement ages

16:31

back in the nineties. So I think

16:33

it really depends on you know if

16:35

it's a very personal decision, what do

16:38

you want your life to be like

16:40

when you're when you're answering you know

16:42

your later years and and for many

16:44

people they want to traditional retirement from

16:47

any full they want. To continue working.

16:58

Not a sudden Tv network Cbs dropped

17:00

forty kids in the middle of the

17:03

New Mexico desert part of a brand

17:05

new reality show. Beautiful. have to do

17:07

their own society from scratch and if

17:09

this sounds good, lord of the Five

17:11

to you. Well, it was meant. You

17:14

were on this mission Together, we were going and

17:16

free to the world that we could make a

17:18

better society than adults turn. I'm just

17:20

going and I want to

17:22

know what does Wilde Keys

17:25

dammit was really about split

17:27

screen kid and a six

17:29

pack part as from Cbc

17:31

available now. I

17:37

know you probably won't have a concrete answer for

17:39

this. I think he even a personal financial advisor

17:41

may not have much to say to somebody in

17:43

this predicament, but. There. Are probably

17:45

people listening to this right now

17:47

and thinking I would love to

17:49

invest in my future self? but

17:52

my present cells has to eat

17:54

and. how should i think

17:56

about retirement in that context when we're in

17:58

the middle of an afford it crisis

18:00

and people are worried about next

18:03

month's rent or what happens when

18:05

the lease runs out and can't

18:07

really afford to spare that

18:09

much money for an RRSP or something else.

18:13

Yeah it's a great question. I'm

18:15

not sure that I have a good answer for that

18:17

to be honest. I can say that what you've described

18:19

is reflected in the results of our

18:21

annual survey as well. We did see

18:23

clearly that Canadians are facing challenges when

18:26

it comes to saving for their retirement

18:28

and one of the things that has

18:30

a major impact on that is income

18:32

adequacy. So we had three-quarters

18:34

of Canadians over 50 who took our survey

18:36

reported that their income is enough for them

18:39

in 2023 but only one-third reported that their

18:43

income is enough and at a level that they could

18:45

save from it and 39% said that

18:48

it is just enough to avoid major problems

18:51

and one in four Canadians over 50 said that

18:53

their income is not enough for them so that

18:55

they're either financially stretched or they're having a hard

18:57

time. So income adequacy

19:00

is a real challenge to your point in

19:02

the here and now needing to make ends

19:04

meet but also wanting to save for retirement.

19:06

So when we hear that only

19:08

you know a third of Canadians can save

19:10

with their current income it is understandable that

19:12

people are worried about financing their retirement and

19:15

we also know that this is particularly acute

19:17

and there's more financial vulnerability

19:19

among certain population groups in

19:21

particular those who have fair

19:23

or poor health. What are some

19:25

other ways people could think about this or could

19:27

be doing this? What are differing

19:30

takes on what retirement might look like

19:32

in the future of presuming to

19:35

your point that life expectancy continues to

19:37

go up? Like 65 is not

19:40

that old now. Yeah

19:42

absolutely it is not that old as I

19:45

get closer to it every year. I

19:47

have the same reaction myself. I

19:49

mean I think that there is you know the

19:52

sort of traditional pathway of

19:54

learning, earning

19:56

and retiring I think in

20:00

the future, again, just what

20:02

I was saying earlier about people's interests

20:05

in wanting to stay

20:07

attached to the workforce in many cases out

20:09

of out of interest and a desire to

20:11

contribute and in some cases out of financial

20:13

need. I think what this

20:15

looks like is really disrupting

20:18

the traditional sort of linear

20:20

pathway for our later years,

20:23

moving away from like I said, learning,

20:25

earning, retiring to, you know,

20:27

learning, earning, learning some more,

20:30

earning some more, maybe taking a break,

20:32

go back to work, so long

20:35

as your health allows you to do that. So

20:37

certainly, you know, more flexibility

20:39

and just a real openness

20:41

to a much

20:43

more nonlinear career path. There

20:46

are certainly some challenges to this, of course,

20:49

workplaces aren't necessarily providing older

20:51

Canadians with the opportunities that

20:53

they're looking for.

20:56

Many workplaces default to

20:58

full-time employment and don't

21:00

make part-time opportunities available.

21:02

Workplaces don't often sort of accommodate

21:04

people downshifting in their career, so moving

21:06

from a more sort of senior management

21:08

role to something less senior

21:11

and part-time. But it's

21:13

really important that workplaces start to

21:15

think about how to accommodate this

21:17

new reality because people want it and

21:19

older Canadians are looking for those opportunities.

21:22

And one thing that a lot of

21:24

people forget often is that older adults

21:26

are one of the biggest cohorts of

21:28

caregivers in the country. Many older adults

21:30

are caregivers for aging parents, spouses,

21:33

siblings, or friends, so they need the kind

21:35

of flexibility that many employers aren't willing to

21:37

offer in order to stay in the labor

21:40

force for very practical reasons as well as

21:42

sort of aligning with their interests. Last

21:45

question then, is this something that we

21:47

should expect to see a policy shift

21:49

on in the coming years as the

21:51

demographics kind of make this impossible to

21:53

ignore for politicians? I

21:56

think so. I certainly think that

21:58

there is room for policy. I

22:00

think there's also an opportunity for

22:03

employers themselves to step up here.

22:05

So, you know, certainly adapting for

22:07

greater age inclusion, thinking about

22:09

age in the same way that they

22:11

think about other areas of discrimination and

22:14

take it seriously as a protected ground

22:16

of discrimination. It really does seem to

22:18

be kind of the last socially acceptable

22:20

form of discrimination. Employers

22:23

need to promote opportunities for older workers to

22:25

return to the workforce if and

22:27

when they want to do that. So

22:29

again, that's flexibility in work arrangements, whether

22:32

it's part-time or remote or

22:34

creating sort of phased retirement

22:36

programs. But the good news is,

22:38

you know, some of the things that are

22:41

required to enable this for older adults are things

22:43

that are good for a variety of people in

22:45

the workforce. Everyone wants

22:47

flexible work arrangements these days. But

22:49

we also know that there are groups who

22:51

fare particularly better with flexible and part-time opportunities.

22:54

So, you know, parents of young children, women,

22:57

persons with disabilities, people with care responsibilities,

23:00

it's a great way to make our

23:02

workplaces more inclusive generally. And I think

23:04

that's something we can all recognize the

23:06

value of in 2024. And

23:10

I think as well, you know,

23:12

there's a role for government as

23:14

well, you know, to your point

23:16

in eliminating some of the structural

23:18

barriers to ongoing labor force participation.

23:20

So looking at things like pension

23:22

eligibility criteria and the sort of

23:24

incentives that those create in terms

23:26

of moving people out of the

23:28

workforce entirely, can we look at

23:31

ways of facilitating, you know, people

23:33

to take a part-time pension while

23:35

working part-time or doing more of

23:37

a phased retirement? So

23:39

I certainly think, you know, there's lots of opportunities

23:41

there. And I'm hopeful

23:43

that given sort of the

23:45

demand and the need for rethinking some

23:47

of our traditional notions of retirement that

23:49

we'll see some movement on this front.

23:54

Alyssa, thank you so much for this. My pleasure.

24:00

Alyssa Briarly is the Executive

24:02

Director of the National Institute

24:04

on Aging at Toronto Metropolitan

24:07

University. Thank you so

24:09

much to Alyssa for sharing her expert knowledge

24:11

with us. You can

24:13

find out more about the

24:15

NIA at niaaging.ca. And

24:19

thanks to Brian for writing in with a

24:21

question that sparked this episode. If

24:24

you have a money problem or just a

24:26

question about navigating this economy, we want to

24:28

hear from you. Many

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of you already know this, but for those

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back and talk about it. Now

25:12

before we go, I have a

25:14

quick housekeeping note. We received some

25:16

feedback about our recent episode about

25:18

RRSPs that some of the information

25:20

presented was confusing and inconsistent. So

25:23

we've updated those show notes for

25:25

that episode to include a clarification

25:27

as well as a link to

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more information. Thank

25:34

you so much for listening. Thank you to the

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listeners who wrote in about that episode. And if

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you liked this show and want us to keep

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share it with your friends and your enemies and

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follow whatever your favorite podcast

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app allows you to do. I'm

25:55

your host and your executive producer, Jordan

25:57

Heath Rawlings. This episode was

25:59

written and produced by Alison Groverman and

26:01

Stephanie Phillips. The sound design was done

26:03

by Kristy Chan. Mary Juebrin

26:05

is our digital editor. Diana Kay is

26:08

our manager of business development and together

26:11

we make up the frequency podcast

26:13

network which is indeed a division

26:15

of Rogers. Thanks again for

26:17

listening and we will talk to you next

26:19

week on In This Economy. In

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the middle of the New Mexico desert as

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