Retirement Planning: More than Just Saving

As your parents did before you, you’re probably putting money away for your retirement. And that’s great – it’s absolutely necessary to save. But planning for retirement the way your parents did isn’t realistic anymore because a lot of things have changed.

For one thing, retirees are more active than ever before and they’re living longer. According to the Statistics Canada Profile on Seniors, near the beginning of the 20th century, the average 65-year-old Canadian could expect to live just over 13 more years. A hundred years later in the new millennium, that figure has jumped to almost 20 years. That means you’ll need more savings and better planning to   last through a longer retirement.

“Young Seniors” – those aged 65 to 74 – today are better off than they were twenty-five years ago.  They are better educated, they are Internet savvy and they are active. People just retiring are not headed for their rocking chairs; they’re likely to see themselves doing a lot more in their retirement than their parents did – travel, luxury leisure, community involvement. Their retirement funds need to be sufficient to accommodate a more active lifestyle than in times past.

Another important consideration is the fact that some people now planning for retirement may not have the generous company pension and benefit plans that our parents relied on. So we may need to save more to compensate.

You also need to understand what your costs in retirement will be. We’ve all heard that Canada’s population is getting older: Statistics Canada reports that the leading edge of the giant baby-boomer generation is now entering retirement. Between 2006 and 2026, the number of Young Seniors is projected to almost double. One aspect of this demographic trend that could affect your financial needs in retirement is the increasing demand for resources, products and services geared to retirees. As with most things, this rising demand could push up the prices of these retirement-related products and services. Sound planning will take the likelihood of increased prices into consideration.

Another big part of understanding your financial needs in retirement will be your possible increased healthcare-related costs. Dealing with health challenges is often part of living longer, and these expenses, such as costly medication, can really strain retirees’ financial resources, especially since we’re less likely to have those gold-plated company benefits plans of yesteryear. Look far into the future and consider whether your finances will be able to cope with extended periods of special care and assisted living arrangements. Make sure you have a contingency fund for long-term or special care in retirement.

Make an appointment today to talk to your financial planning professional about your retirement plans. Make sure you discuss how long your money needs to last, which is a function of when you plan to retire and what your life expectancy might be. Include in your discussion your savings plan, arrangements to retire any debt you hold, any pension and benefits you might be entitled to and health conditions that may add to your expenses in your later years. The award-winning planning experts at Dedicated Financial Solutions in Mississauga can help you create a custom plan that includes these factors and more.

Leave a reply

Your email address will not be published.