With recent Statistics Canada research indicating the average Canadian can expect to spend approximately 20 years in retirement, one question to ask yourself is: will you outlive your retirement savings?
Do you think you have enough retirement savings to maintain your quality of life for that length of time? And what if you live longer than most people or have special healthcare needs that increase your cost of living?
According to the 2010 RBC Retirement Myths and Realities Poll, only 50 per cent of retirees said they had sufficient assets to last them to the age of 100. In addition, 17 per cent of retirees and those on the verge of retiring stated they had parents who had outlived their savings or were likely to do so. Many expected the government or their adult children to make up for any shortfall.
“If this becomes your reality, it could have an impact on both your parents’ and your own quality of retirement life,” says Lee Anne Davies, head of retirement strategies at RBC (www.rbc.com/yourfuture). “It’s important to plan ahead, to help safeguard your future retirement years.”
For example, you could play it safe when you select an age for your financial planning projections and base your calculations on a lifespan of 100 years. You also could consider who else might need access to your retirement nest egg. Is there another way to provide for their needs, such as long–term care insurance?
“Try to be more aware of your spending and realistic about where you might be able to cut costs today so your lifestyle is not reduced in later years,” adds Davies. “Keep in mind that your expenses are likely to increase if you need more help from services such as home maintenance and personal health care workers in later years.”