Financing Your Retirement

One of the “funnies” my friend forwarded to me the other day by email was a website that can forecast my life expectancy if I plug in the relevant details. I figured why not? I uploaded the requested data and the answer was 101.5 years!  Well, I am in my early seventies in pretty good shape and look after myself, my mom died at 96, statistics claim centenarians are becoming one of the fastest growing demographics and medicines are keeping us alive even longer. There is a reasonable chance that my demise at the age of 101.5 is not a joke.


There is only one problem: I will have far outlived my retirement funds! When I retired 10 years ago, like most people, I calculated the cost of living on the basis of 60-70 percent pre-retirement income, a foundation still used today. I did all my due diligence with a budget and with the mortgage paid off, and no other debts, I thought that my wife and I were well within the comfort zone of income coming in from investments and pensions.


It wasn’t too long before reality surfaced - nothing drastic, just “things” that were never given a heading in the old budget. More to the point, it was the realization that while our income was more or
less fixed, our needs were increasing.
What are your missing items? If you are about to retire, and counting your chickens, listen up! If you are well into retirement, you can just nod and say, “Yup, he’s got that right!”


BIG TICKET ITEMS
If you’ve decided to stay in your house, budget for that new roof or other major maintenance. If you’ve downsized and moved to a townhouse or condo, strata fees will increase regularly and there are regular assessments. For those who haven’t switched to riding a bike or a scooter, you’ll eventually need to replace your car. Allocate funds for these items unless future depletion of capital is not a problem.


FAMILY
God bless them, those kids and grandkids - the more the merrier. With their significant others, how many birthday and Christmas gifts need to be purchased? What about grads and weddings or other special occasions? Put aside a chunk of money for these expenses. Oh, and let’s not even talk about the potential cost of helping out children coming home after a marriage break up, job loss or other financial disaster - the kind of events that could trash any budget.


HEALTH
If you were lucky to keep your extended health insurance from employment, great! If not, you pay the premiums, which increase with age and health problems.
If you pay the freight as you go along, just some simple blood pressure meds, vitamins and supplements, eyeglasses and perhaps a hearing aid, physio and dental may run into thousands. As you age, these costs keep going up! And have you considered critical illness insurance?


TRAVEL
That was on the top of the list for your retirement activities, right? Before you go anywhere, you had better have travel insurance and hope to be healthy, because on top of the age-based increases in premiums, the extras for various health problems are significant. Then you need to allow for the ever-increasing cost of all travel-related functions and hope that in 10 years’ time you can afford to travel further than Calgary!


INVESTMENTS
Even with the best financial advisor managing your funds, another trashing by the markets like a couple of years ago, may put a major damper on your financial future. You’ll need all the help you can get unless you are a financial wizard or independently wealthy, in which case, none of the above would bother you. Happy retirement!

Article by, By George Zador