Boomers are often optimists – but, according to a recent Insurance Journal survey, they can also be unrealistic about their health and the state of their finances in retirement.
The survey found that 97% of respondents rated their current health as good or better and 86% expect to retire in good health, yet 61% of employees over age of 50 actually suffer from one of more chronic health conditions. The most common conditions include hypertension, arthritis, high cholesterol, diabetes and mental health problems, such as depression or anxiety.
When it comes to finances more than one third of survey respondents reported that they save 10% or less of their current salary for retirement but plan to withdraw an average of 15% from their savings which is more than four times the typically recommended rate of withdrawal.
The main take aways from this survey are:
•Many Boomers need to be more realistic about their health and the escalating healthcare costs they are likely to face in retirement.
•Many should be saving more for retirement
•In retirement, they will require a sound financial plan that allows them to live the lifestyle they always dreamed, while ensuring their financial resources last for all their retirement years.
Some Boomers are rapidly heading towards retirement and others have already retired – but it’s never too late to plan for a secure financial picture. Here’s a few tips that apply equally to Boomers and working Canadians of any age.
•Start savings as early as possible – and save regularly
•Avoid bad debt that doesn’t generate income or increase your net worth
•Invest intelligently – especially in RRSP’s and TFSA’s where your earnings are tax sheltered
•Ensure that you have adequate insurance coverage for health/medical challenges that may arise – especially important are disability insurance, critical illness insurance and long term care insurance. Keep in mind health care costs generally increase with age.
•Have a plan that includes a realistic budget for your retirement years together with a realistic withdrawal strategy. Maintain an emergency fund to deal with any surprises. Be sure your plan has a provision for inflation
And most importantly get advice. Your Certified Financial Planner can provide the expertise and realistic assessment you need to implement a financial plan that works for you, regardless of your age.
This column is written by Michelle Weisheit CFP, IG Wealth Management and presents general information only and is not a solicitation to buy or sell any investments. Please contact your own advisor for specific advice about your situation.