More people are living longer, which means their money needs to last for more years, too.iStockPhoto / Getty Images
Tom Schmidt wasn’t yet 60 years old when the multinational pharmaceutical company he worked for went through various consolidations and mergers. But rather than getting shifted to a new position, he decided to retire. He was tired of the constant business travel anyway.
Schmidt, who had just moved to a new home in Stouffville, Ont., with his wife, immediately busied himself with a lengthy house-related to-do list.
“When you’re home all day, there are a lot of hours in the day,” he says. “I got the list done in three months.”
He quickly realized a traditional retirement wasn’t for him, especially since it was likely going to stretch out for decades.
“I was already going stir crazy,” he says.
So, Schmidt, now 71, took up consulting. While he’s working hard, he’s also still making time for leisure, travel, his grandkids and his non-profit work.
“When I’m 75, I may scale back a little,” he says. He feels great and as long as he has time to enjoy himself, sees no reason to stop work entirely for awhile.
Many other Canadians are planning to live much longer lives, too and for good reason: The average Canadian now lives to age 81.1 — it was only age 50 at the turn of the 20th century. Meanwhile, centenarians are the fastest growing age group in the country, with Statistics Canada predicting about 90,200 people in Canada will be over the age of 100 by 2065.
That fact is influencing how older Canadians view their time and finances. They now need to ensure their money lasts for longer than they would have years ago.
“This wasn’t such a big issue in years past,” says Kathy Fahey, a certified retirement transition coach and owner of Your Ideal Retirement in Kelowna, B.C. “People would pass away shortly after they retired. Now we’re living sometimes to 90-plus.”
How do your life and your financial plans need to adjust to take into account a longer life? Here are some ideas.
Work longer
One problem with living to 90 is that if you retire at 60, you have 30 years of leisure time. That might sound nice as you’re grinding away at work, but in reality, you may find yourself getting bored pretty quickly, notes Fahey. As well, keeping your mind active and staying social is a key part of retirement, and that’s easier to do if you’re working.
“No one wants a life of leisure for 30 or 40 years,” she says.
Many older people are staying in the workforce, either in their old job, or, like Schmidt, doing something new. In fact, one-third of Canadians are working after age 60 — half of older workers do so because of financial necessity.
Fahey suggests people craft a plan for themselves that aligns with their values, taps into the passions, and takes into account their spouses and families. If that plan entails working, the job should support the various aspects of their life.
Manage your money
Living longer will require more money – most financial planners now create plans that last until age 90. According to the Sun Life Retirement Now Report, Canadians live on an average of 62 per cent of their working years income in retirement. Getting to that target could take multiple income streams, including Canada Pension Plan (CPP) and Old Age Security (OAS) payments, workplace pensions and personal savings.
“Since we’re now living longer, healthier lives due to medical advancements, ensuring Canadians have valuable advice is more important than ever,” says Vimala Manuel, a CFP financial planner. “It’s important to look at working with a financial planner to create a retirement income plan. Part of this planning should look at not only how much you’re saving, but also how you’re invested and in what retirement income sources. With changing markets, interest rates and pension plans, it can be a complicated environment to maneuver through. Having expert guidance to grow your knowledge and have a solid income plan is key.”
But having enough to get to 90 or beyond is easier said than done. Pension income could fluctuate depending on the market, while many parents are paying for the children well into adulthood.
“The financial dependency of children is lasting longer than ever,” explains Fahey. “Boomer parents are spending money on their kids to their own detriment.”
People need to work with a planner and continue revising their calculations of how much they need, depending on how long they think they may live. They’ll want to continue investing some of their money, while come up with a prudent withdrawal strategy, too, says Fahey.
Take care of yourself
“I want to stay healthy until the day before I die, and then I want to go quietly in my sleep,” says Schmidt, only half joking. Research shows that healthy living doesn’t just expand your lifespan, it also makes for a better quality of life, even in advanced age.
“Do things that enhance your overall well-being,” suggests Fahey. That means dealing with your physical health via regular exercise – make sure it’s something you enjoy – a healthy diet and plenty of sleep. But keep tabs on your emotional health, your relationships and your spiritual needs as well.
Most importantly, you need to derive meaning from your everyday activities. That could be paid work, volunteer projects, education, leisure activities or your social time.
“Everyone needs to feel vital and relevant,” says Fahey. “And we all need that to our dying day.”
Advertising feature produced by Globe Content Studio. The Globe’s editorial department was not involved.