With the lifespan of Canadians getting longer, Boomers aged 55 and over now are facing a retirement that could last for 30 years.
There have been a lot of studies and reports showing Canadians are worried about their retirement and don’t feel they’re well prepared financially for this stage of their lives.
A recent poll by RBC found that while the top three retirement concerns of Canadian boomers are longevity related, almost half say they don’t feel they are where they should be in terms of their saving for retirement.
According to the poll maintaining their standard of living, having enough savings, and covering health care costs are the biggest concerns of Boomers 55 and over. Yet, 46 per cent say they felt financially “somewhat short/nowhere close” to where they anticipated they would be at this point in their lives in terms of their saving for retirement.
The number one question they have on their minds is, “will I have enough money in retirement?” As a result, one third say they are willing to adjust their retirement lifestyle plans to prepare for their retirement, which could last as much as 30 years after they retire from work.
“Thirty years in retirement should be a huge gift of time when you can do what you want when you want but you need to connect the dots between living longer in retirement and preparing for those additional years,” says Yasmin Musani, director of Retirement Client Strategies with RBC.
While finances obviously are an extremely important part of retirement and retirement planning, they’re not everything. Retirement should always be top-of-mind when making financial decisions but Canadians need to consider and plan for every possibility that may impact their ability to achieve their ideal retirement lifestyle.
Bill Hill, a national retirement planning consultant for RBC, says Canadians should ask themselves a few questions first that will help them determine their priorities – Where do you want to live? Will you be providing assistance to younger or aging family members? And have you discussed your plans with people close to you and with a financial adviser?
“You’ll likely fine your priorities — and their related financial implications — shifting as you approach and then enter retirement,” Hill says.
There are other steps people can take to ensure they prepare for a successful retirement.
Determine your annual income from savings, investments, property, and government and employer pensions. If you have a company pension, determine your pension entitlements and when you can start collecting benefits. If you want to continue working in retirement, find out if your employer will allow you to work part-time or with a reduced workload.
Estimate your annual expenses during retirement by calculating your current annual living expenses and then identifying what may increase, decrease or stay the same. Divide your retirement expenses into needs and wants. This will help you understand areas where you can possibly reduce expenses.
Understand how different sources of income are taxed and the best ways to stretch a dollar in retirement or maximize after-tax income to minimize taxes. This can be done with a retirement income plan that assesses how to draw efficiently from retirement savings and pensions
Establish an easily accessible emergency fund, like a line of credit or savings account. Having funds available that are liquid and free from market fluctuations will help you deal with unexpected costs and avoid prematurely selling long-term or income-producing investments.
Review your risk tolerance and ensure your portfolio reflects your comfort level and needs in retirement.
It’s also important to keep in mind that as you age, health issues may arise and require additional health care not covered by provincial health benefits. It’s necessary to prepare for these additional health care costs.
The retirement landscape is constantly evolving so its important Canadians are prepared, financially and otherwise for their golden years.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2017 Talbot Boggs