Re­tire­ment dreams, re­al­i­ties

The Guardian (Charlottetown) - - BUSINESS - Jeff Somers Jeff Somers, BA, RRC, CFP works at In­vestors Group in Char­lot­te­town. This col­umn, writ­ten and pub­lished by In­vestors Group Fi­nan­cial Ser­vices Inc. and In­vestors Group Se­cu­ri­ties Inc. presents gen­eral in­for­ma­tion only and is not a so­lic­i­ta­tion

Boomers are of­ten op­ti­mists – but, ac­cord­ing to a re­cent sur­vey, they can also be un­re­al­is­tic about their health and the state of their fi­nances in re­tire­ment.

The sur­vey in the In­sur­ance and In­vest­ment Jour­nal found that 97 per cent of re­spon­dents de­scribed their cur­rent health level as good, very good, or ex­cel­lent and 86 per cent ex­pect to re­tire in good health – and yet, the sur­vey re­vealed that 61 per cent of em­ploy­ees over age 50 ac­tu­ally suf­fer from one or more chronic health con­di­tions. The most com­mon con­di­tions were hy­per­ten­sion, arthri­tis, high choles­terol, di­a­betes and men­tal health prob­lems such as de­pres­sion or anx­i­ety.

Where fi­nances are con­cerned, more than a third of sur­vey re­spon­dents re­ported that they save 10 per cent or less of their cur­rent salary for re­tire­ment, yet in re­tire­ment they plan to with­draw a yearly av­er­age of 15 per cent from their sav­ings – or more than four times the typ­i­cally rec­om­mended rate of with­drawal.

The main take-aways from this sur­vey are ob­vi­ous:

• Many Boomers may need to be more re­al­is­tic about their health and the es­ca­lat­ing health­care costs they are likely to face in re­tire­ment

• Many should save more for re­tire­ment

• And, in re­tire­ment, they must have a sound fi­nan­cial plan that al­lows them to pur­sue the life­style they want while en­sur­ing their fi­nan­cial re­sources will last for all their re­tire­ment years

Boomers are rapidly head­ing to­ward (or are al­ready in) re­tire­ment, but it’s never too late to plan for a se­cure fi­nan­cial fu­ture.

Here are a few tips for do­ing so that ap­ply to Boomers and, equally, to work­ing Cana­di­ans of any age:

• Be­gin sav­ing as early as pos­si­ble – and save reg­u­larly

• Avoid bad debt that doesn’t gen­er­ate in­come or in­crease your net worth

• In­vest in­tel­li­gently – es­pe­cially in reg­is­tered re­tire­ment sav­ings plans (RRSPs) and taxfree sav­ings ac­counts (TFSAs)

• Be sure that you have ad­e­quate in­sur­ance cov­er­age for any health/med­i­cal chal­lenges that may arise – es­pe­cially dis­abil­ity, crit­i­cal ill­ness and longterm care in­sur­ance. Keep in mind that health­care costs gen­er­ally in­crease with age

• Have a plan that in­cludes a re­al­is­tic bud­get for your re­tire­ment years, cou­pled with a re­al­is­tic with­drawal strat­egy. Main­tain an emer­gency fund to deal with any sur­prises (health and oth­er­wise). Be sure your plan in­cludes a pro­vi­sion for in­fla­tion

Most im­por­tantly, get ad­vice. Your pro­fes­sional ad­vi­sor can pro­vide the ex­per­tise and re­al­is­tic as­sess­ment you need to cre­ate and im­ple­ment a fi­nan­cial plan that will work for you, re­gard­less of your age, for a life­time.

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