6 ways to adapt in the Aging Economy
Canadians aren’t just slow to prepare for retirement, they’re concerned about living comfortably in the Aging Economy.
More than half of respondents in a survey of Canadians aged 55 and over report that living longer comes with increasing concerns on health and caring for the aging population.
The Aging Economy: Improving withAge, from BMO Wealth Management, draws insight from a demographic that has tremendous influence on the Canadian economy, with the number of seniors increasing at a faster rate than the number of children born. The report reveals that living longer has not changed the number of years spent in retirement because Canadians are extending their working years.
“In order to have the long and fulfilling retirement that most Canadians want, effective financial decisions need to be made about savings strategies, retirement and estate planning goals,” says Chris Buttigieg, director, Wealth Institute, BMO Wealth Management.
KEY SURVEY FINDINGS:
- 51 per cent of respondents are concerned about the health problems and costs that come with living longer; 40 per cent are worried about becoming a burden on their families and 47 per cent are afraid of running out of money
- Canadians are staying in the workforce longer to supplement their retirement income
- 59 per cent of respondents say they have differing opinions from their partners about their individual and shared financial goals
- 33 per cent say they want to help their children financially in their lifetime even if they live beyond average life expectancy
- 25 per cent are concerned about maximizing their retirement income, followed by 22 per cent who expressed concerns about outliving their savings and investments
6 financial tips to adapt in the Aging Economy
1 Talk to your spouse or partner
It’s easier to accomplish life goals when both partners are aware of each other’s differences in opinions or objectives. Compromises and planning can help both partners achieve their financial goals.
2 Help your children
Providing financial support to adult children or grandchildren is a decision that should be considered within a larger context that includes both retirement and estate planning considerations, ideally within a comprehensive wealth plan. Be aware of the amount you can part with – without affecting your financial goals.
3 Prepare for healthcare costs
Healthcare costs can impact the ability to achieve retirement goals, even though many medical costs are covered by provincial programs. The cost of long-term care can have a detrimental financial impact on retirement and estate plans. A financial plan could build in contingencies for the additional costs.
4 Reduce taxes
Taxes are an important consideration in both retirement planning and estate planning. One of the most effective ways to reduce the overall family tax bill is pension income-splitting. Couples can take advantage of their partner’s lower marginal tax rate when one partner’s retirement income is much higher than the others.
5 Give if you can
Charitable giving comes with significant tax benefits to be realized by charitable giving at the top marginal tax rates.
6 Make a will
It is important to work with an experienced legal professional to prepare wills and Powers of Attorney that clearly explain estate plans and distribution goals.