Many Canadians think of retirement as a time filled with vacations, getaways to the cottage and spending more time on hobbies and interests. However, there are many other factors to consider when thinking about retirement savings. More Canadians are forgetting about some key obstacles that might prevent them from saving for retirement.
Canadians are underestimating their life expectancy. Improved health care technology is one of the most notable societal advancements. As a result, seniors are living longer because they are more aware of what it takes to stay healthy.
According to Statistics Canada, Canadian males have an average life expectancy of 79 and females an average of 83. In 2000, the average life expectancy for males was 77 and females 82. On average, Canadian life expectancy increases by two to three years each decade.
Knowing this, seniors now have to save more for their retirement than their predecessors. According to the Vanier Institute, four-in-ten Canadians age 55+ believe they will outlive their retirement savings; an additional 40 per cent will still be in debt after the age of 65.
According to Benefits Canada, Baby Boomers currently account for 33 per cent of the population, while 14 per cent of Canadians are over the age of 65. By 2036, roughly 25 per cent of the population will be over the age of 65. By then, one-in-ten Canadians will require long-term care by the age of 55, three-in-ten by the age of 65, and five-in-ten by the age of 75.
More seniors will require long-term care in the next couple decades, and with that, the cost of long-term care will also be on a steady climb. Based on inflation for health care services reported by Statistics Canada, the inflation rate of long-term care costs per-year since 2010 is an average of three per cent per-annum.
Is your 20-29 year old still living at home? According to the 2011 Census Report, 42.3 per cent of over four million young adults either never left the parental home or returned home after living elsewhere. The majority of this population live with their parents for emotional or financial support. Some other reasons include cultural preferences, cost of housing, aspirations for higher education, or the struggles of unemployment.
These and other factors can help you determine how much you need to save to live a comfortable retirement life. It is also important to understand your options when it comes to financial security. Seniors who are at least 55 years of age and who own a home are eligible for a reverse mortgage. This way, you can access up to 55 per cent of the value of your home, while maintaining the ownership. There are no payments required and you can receive your tax-free cash in monthly installments, in a lump sum or a combination of both. The best part is, the loan from the reverse mortgage does not have to be repaid until the borrower passes away or moves/sells their home. While saving for retirement, know that this is an option for you.
If you want to find out now what you can access from your most secure investment, your home, get in touch at any time. Saving for retirement is important, so don’t miss out on the chance to put away as much as you can.
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Rasha Ingratta & Mortgage Associates
By Mortgage Intelligence
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