We’re living longer and costs are rising, so now might be the time to revisit your financial plan. Consider these areas to make sure you’re still on track.
Extend your financial plan timeframe
I guide most people to extend their financial plan timeframe until age 100. There are more centenarians than ever before (triple the number in Canada since 2000), and if that trend continues, you might hit that mark, too. Heck, my grandmother is 102 and is still living independently. My other grandmother recently passed only days away from her 103rd birthday.
Amplify care costs
Say you do live an extra 10 years and require long-term care the majority of that additional time. Does your plan allow for those costs? My advice: Plan for at least a mid-level version of long-term care, and for at least twice as long as you may have originally accounted for. These costs show no signs of slowing, and despite financially supportive programs for aging in place, that option is costly. Only good things can come from doing early research on your future care requirements, and reflecting those estimates in your plans.
Make the necessary changes to your budget today
Reliable indexed pension, RRIF (Registered Retirement Income Fund) withdrawals, Canada Pension Plan, Old Age Security or not, if you’re planning for a longer life, and greater care costs, you might need to shift aspects of your spending and savings habits, today.
For example, would it be wise to start saving again by socking away money every month in a tax-free savings account (TFSA) or high-interest savings account (HISA)? Should you shift your travel plans to prioritize those experiences sooner in your plan, and perhaps scaled-down versions of those trips, to make the money last longer? Is downsizing an option in order to shore up your nest egg?
Following a budget template will be extremely helpful in staying on track with your spending. Pick any kind, but ensure you like it and can stick with it.
Get closer to your financial planner or money coach
They’ll help flag any gaps between your current sources of income in retirement, the pace you’re spending at, and what you’ll need to preserve for those later years. These professionals can also be quite creative with potential solutions to remedy gaps. I’ve gone so far as to recommend lucrative side hustles for some of my retired clients, who’ve filled their wallets and built beautiful social connections at the same time.
Your insurance, will and power of attorney should also be reviewed – should you shift insurance coverage, add back-up executors (what if you outlive the ones you’ve listed?) and more.
Don’t get upset when your children ask you about your finances
The financial impact of aging is a family affair. Adult children often try to understand how ready you are for retirement, your wishes for when you pass away and, nowadays, whether there’s any flexibility to help them buy a home or support grandchildren with post-secondary costs, et cetera. They don’t view the latter as rude, by the way; with extremely high costs, and incomes that are not keeping up, asking for financial help is commonplace.
My advice? Shed some light on your situation, particularly if you might need their help down the road. That gives them an opportunity to plan.
