Canadians starting to think about retirements stretching beyond their 80s

There was a time when one worked until age 65, got the gold watch, received a pension for perhaps 10 years, and then passed away.

But now, reports Business In Vancouver, “rising life expectancies are extending Canadians’ financial horizons” to their 80s and even beyond.

In an interview with RBC’s Howard Kabot, the publication says there’s a new trend “that sees financial plans being adjusted to accommodate longer lifespans.”

Kabot tells Business in Vancouver that many clients are fine-tuning their investment plans to factor in the idea that they’ll still be healthy and active in their 80s and beyond.

In the past, he states in the article, people assumed “they would slow down by the time they were 80, choosing to stay closer to home.” Today, he points out, “clients are now opting to travel and stay active into their 80s, postponing those plans until their 90s.”

“The population is getting healthier and they are living longer,” Kabot tells Business In Vancouver. “When they needed a financial plan in the past, it was a standard to have enough money to get to 90. Now, we’re easily using 100.”

Let’s let that last bit sink in – planning to get to 100!

So what does that type of planning look like?

The article says there is an emphasis on “making money last longer” so that there’s funding for moving to a retirement home, or perhaps making changes in order to be able to age at home.

An article in The Globe and Mail looks at some of the factors to consider when tweaking your financial plan to include longevity.

The article says that while fixed income investments from things like “defined benefit pension plans and annuities” will ensure you don’t run out of money, you still want to diversify your portfolio so that you are getting growth to counter future inflation.

You also need to be careful with how much you withdraw from your savings each year, the article says, citing the “four per cent” rule as a fairly safe way to ensure you don’t use up your savings too quickly.

The article makes a strong case for annuities.

“An annuity (typically) involves an agreement between an individual and an insurance company, where the person makes payments in return for an income flow typically throughout their retirement years. (They) can be valuable for managing longevity risk, especially for older retirees with even more years under their belt.”

Members of the Saskatchewan Pension Plan have the option of converting some or all of their SPP savings into an annuity at retirement. The SPP Retirement Guide lays out the annuity options that are available – the life only annuity (monthly income for you for life), the refund life annuity (same, but any balance of the amount you provide for the annuity that is not paid out to you by your death is paid to a beneficiary) and the joint and last survivor annuity, where a surviving “spouse or common law partner” will receive a monthly annuity on your death.

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