Congratulations – if you’re a senior or close to it, you’re likely to enjoy a longer and healthier life than any generation before you.
According to 2006 Census data from Statistics Canada, people are living longer, with the second fastest growing portion of the population age 80 and over. Between 2001 and 2006, their number jumped to about 1,167,310 from 932,000 – marking the first time the number of octogenarians topped one million.
“Planning for retirement has never been more important,” said Investors Group tax and financial planning expert Jack Courtney. “As more Canadians live longer, they’ll also need their savings to last.”
Until now, it has been common to plan for a retirement that ends at age 80 (the average life expectancy in Canada today is 77.7 years for men and 82.5 for women) not 100. But by following a plan that ends at age 80, you could find yourself running short if you are one of the growing number of people living a decade, if not two, longer.
Here are some tips to set you on the right path to a long retirement:
• Add to your retirement income from your Registered Retirement Savings Plan with a Tax-Free Savings Plan plus a well-chosen portfolio of non-registered investments. Look at investments that benefit from preferential tax treatment such as tax-advantaged investment structures.
• Choose mutual funds specifically managed to minimize annual distributions. You may not have to report any investment income until you sell your investment so you can time each sale for minimal tax exposure.
• Consider Universal Life insurance as a means of sheltering excess capital while maximizing the value of your estate and/or a life annuity that will provide you with guaranteed regular income for the rest of your life, no matter how long you live.
• Protect your income (or your spouse’s) with carefully selected insurance coverage that could include life insurance, supplemental health insurance, disability insurance, critical illness insurance, and long-term care insurance.
“You don’t want to outlive your retirement savings or see them eroded by unexpected health care and medical costs,” Courtney cautions. “So, more than ever before, an effective retirement financial plan is an absolute necessity.”
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