The simple fact that Canadians are living longer and longer means that we are more likely to come face-to-face with unexpected events that can have financial consequences. A Canadian in their 60s has a very good chance of making well into their 80s. This increased longevity means that Canadians need to plan to have their retirement income last for at least 25 to 30 years. Unfortunately, a lot can happen within those 30 years of retirement that can affect a serious effect on your savings. Read on to learn more about how to best prepare for the unexpected when planning your retirement.
Long-Term Health Care
Canadians can expect to experience at least one major life event that will upset their financial life in their senior years. The most expensive events typically involve the cost of health care. Depending on your situation, you may face higher than expected health care expenses because you are no longer covered under your employer’s group health insurance. This may lead to you facing costly expenses such as dental, vision, and prescription expenses that are not covered by government plans. The largest potential health expenses you will need to plan for is long-term care. The government only foots a minor percentage of that bill, so most of it will need to be paid out of pocket. A stay of even a couple of years can put a major dent into your savings, which is why it’s a smart idea to allow for these potential expenses by planning accordingly. You should purchase long-term health care if you won’t be covered by your employer anymore.
The cost of living
It’s easy to convince yourself that your cost of living will decrease during retirement. Expenses like transportation will go down because you are no longer commuting, but you will see an increase in many other ways. Your time spent travelling and participating in recreational activities needs to be factored in as well. You can’t forget about inflation either. Even low-level inflation will devalue your savings somewhat. The key is to be a bit aggressive and aim for investments that will outpace inflation, instead of being completely safe and having inflation cut into your retirement savings.
Expect the unexpected
Retirement savings is all about planning for the expected and accounting for the unexpected. If you want to be sure that you have everything covered, you should talk to a retirement planning advisor at The Beacon Group of Assante Financial Management Ltd. to get started.