by Viola Van de Ruyt, VandeRuyt Wealth Management Group –
This fear for women is a very valid question. It is usually asked in the form of “can I afford to retire?” My standard answer has always been: “well, that depends on what you plan to do in retirement.”
Will your days be filled with gardening and volunteer work or will it be golf and cruises? In addition to discussing what a client will spend their money and time on, we also discuss family longevity, health and the unexpected variables that can derail the best-laid plans.
With the average age of widows in Canada being the shocking age of 56, it is important to think about how your retirement finances would change if you lose your husband. What if one of you had a prolonged battle with cancer?
Unfortunately, we baby boomers have grown up with the idea of “Freedom 55” being planted in our mind, but for the majority of Canadians it is not possible or realistic. A more realistic scenario being embraced by boomers is a retirement in stages. First stage may be continuing in your existing career for a couple of extra years but living off the income you would have in retirement as a test. The second stage continues in the same profession but with reduced hours or entering a more flexible profession that you planned towards in stage one.
The third stage of complete retirement may not occur until your late 60s or even early 70s. If your parents or grandparents lived into their late 80s or 90s you should be planning into your 90s and even 100. Starting full retirement at age 70, many women will still be looking at a retirement of 20 to even 30 years!
Research on the spending patterns of retirees has found that they initially spend heavily on projects, travel and dreams or goals. After a few years, spending often tapers down as the bucket list is checked off and stabilizes to a more modest level. The worries are that spending can dramatically increase with escalating health care and housing costs in the later years.
The elephant in the room for many baby boomers though is the mortgage or the more innocent-sounding line of credit. You should not be planning to fully retire if you carry these debts.
Can you avoid becoming a bag lady? The answer is YES, if you plan ahead with eyes wide open. A trusted advisor will help you balance your current wants with your future needs so that you can have peace of mind.
For more information visit www.violavanderuyt.ca.
