five COSTS

YOU MAY HAVE FORGOTTEN IF YOU THINK YOU HAVE SAVED ENOUGH

A lot of the needs that people conceive of when thinking of the future are routine: What it will cost to live in retirement as they do before retirement, perhaps what will be left for heirs. But there can be much higher costs that eviscerate savings and even the costs of running a home or a rental property when it is harder to haul ladders. Then the costs of retirement rise above what was planned. Says Graeme Egan, financial planner and portfolio manager with KCM Wealth Management Inc. in Vancouver: “A lot of this is not risks that are front of mind, but that you can anticipate.” Here are a few of them:

1 Long-term care costs You can’t readily estimate what illnesses or conditions may raise your cost of living If your assets can’t cover the bills, it is worth investigating both long-term care and criticalillness policies Long-term expenses are not just institutional They could include costly drugs that are not paid by provincial health-care plans It could even mean medical travel to the U S or other centres for treatments that require long waits in Canada The costs could include transportation, or foreign hospitalization Note that travel medical coverage typically excludes pre-existing conditions

2 What What it it may may cost cost to to maintain maintain your your house house or or cottage cottage If you have to hire help to do the chores you used to handle, costs may skyrocket House maintenance can be a major expense It may be nickels and dimes when you are alive If someone else has to do it because your health doesn’t allow it, the bills can mount up, especially if maintenance was deferred in a period of illness or old age

3 Costs of running a small businesses If you’ve done it all and others who take your place will have to hire staff, tradespeople and managers, then you should make provisions in your retirement budget or will that anticipate the costs Without such attention, the asset could become a money pit that winds up requiring costly subsidies out of your pocket

4 Inflation Anyone who remembers the 1970s and the early 1980s when prices rose at double-digit rates knows that our present rate of inflation in the low single digits may not last Retirement budgets that get most of their cash flow from low-yield Guaranteed Income Certificates and Canada Savings Bonds will lose purchasing power over time To pace inflation, you need common stocks or other assets that can generate higher incomes over time Otherwise, a retirement that starts out adequately funded can leave you poor after decades of inflation

5 Money to help children or grandchildren purchase their own homes It can come out of retirement savings or be included in wills It will be a gift unlikely to be forgotten, even if it is not strictly your own cost of living