Rhonda's Financial Blog

Is 65 the New 40?

Monday, October 10th, 2011

It used to be that we stopped working at age 65 and lived out our few remaining years in leisure (if we were one of the lucky ones who lived past 65). If you are 65 or older today, living to age 80 is not unrealistic. Have you given much thought to how you plan on spending the next 15 to 20 years of your life?

We are healthier than ever before and this translates into many more years of active productive living. This also means ensuring there is enough income coming in to cover whatever lifestyle we have chosen.

The focus of this ‘new retirement reality’ seems to be on ‘choices.’ For example, you may decide to phase out of your existing career and use your knowledge and skills and go into business for yourself. You may plan on bringing in enough income to keep you afloat while meeting all the other needs that working provides – purpose, structure, belonging, fulfillment, socialization. Or perhaps you may find an easy, stress-free part time job more enjoyable – Wal-Mart is always looking for greeters! If the financial situation is looking good, volunteering or babysitting the grandkids may be more fulfilling. Travel and other active hobbies may be what you are looking for while you are healthy and able to enjoy them.

No matter what your version of the perfect retirement is, you need to do some planning. If you were expecting to stop any type of income producing work at your desired retirement age you need to ensure you have enough pension income and savings to support the next 20 non-earning years. You need to do this while keeping the rising costs of living in mind, especially in the area of services relating to the aging population. Taking a realistic look ahead and planning carefully with a BC financial advisor will help ensure that this next phase of your life will meet your expectations.

I would suggest that you sit down and consider what you see for the next twenty foreseeable years. If you have a spouse, you’ll want to sit down with them as well and share what you both see for the ages 65 and beyond. Consider your current health, your individual interests, your shared passions, and each of your less tangible needs. After all, there are things that employment provides beyond just a pay cheque.

After you consider the options, take a realistic look at what income you have coming in to support your ideal retirement. Look at your CPP, OAS and your company pension. You’ll need to meet any shortfall by your savings or the equity in your home. If not, you’ll need to turn your experience into some type of income generating work. Alternatively, you may consider finding some type of work involving a hobby or a passion you have. This will make working in this phase of life more meaningful and probably more enjoyable.

As you can see, the planning process is essential to feeling fulfilled and being comfortable through retirement. A BC financial advisor can greatly help in with this process. They can do all the number crunching for you and help devise a plan to achieve your ideal retirement.

3 financial ‘must do’s’ for 2011

Monday, January 24th, 2011

If getting in better financial health is a goal for the coming year, start with ensuring these ‘3 essentials’ are in place

1.   Have an up to date Will.

It is important that everyone have a Will and one that is properly drafted by a professional.  This is especially important if you have young children. If you do not have a Will and should pass away, the Government will decide how to distribute your assets and to whom. And most importantly, they will decide who will be the guardians of your children according to the law. This may not be who you wish it to be.

If you have a Will already, remember to review it any time a life change occurs- marriage, birth of a child or grandchild, divorce or a passing of a loved one.  And don’t forget to change your Will if you should separate from your spouse or your assets could pass along to them should you die.

Finally, name someone you trust and who will be around to handle the settling of your estate- an ‘Executor’. This often is an adult child, sibling or close family friend.

I would also suggest setting up a Power of Attorney/Representation Agreement at the same time you are meeting with a professional to draft your Will. So if you are ever incapacitated, someone you trust can act on your behalf.

2. Make sure you are sufficiently insured.

Just as you would protect your car or home from misfortune, you need to also protect your family should you pass away while they are still financially dependant upon you. How much insurance will vary according to each person’s unique situation. Do you have dependants, are you the main ‘bread winner’, are there future costs, such as education or a spouses’ retirement, you want to ensure are taken care of if you were not around? Generally, you need to have enough insurance to pay down the mortgage, any debts or outstanding bills and burial costs. It is then recommended that you have enough funds remaining to provide income for your family for the number of years you deem necessary.

In addition to life insurance, consider having adequate disability insurance in place.  It is advised to have enough coverage to provide 60 to 70 per cent of your household’s income.

3. Have an emergency fund.

As they say, “life happens when you’re busy making other plans” and life tends to cost money. Having enough money put aside for such unexpected events can be the difference between staying afloat or sinking financially. One of the most important elements of your financial health is to ensure an emergency fund is in place – and sooner rather than later.

The general rule of thumb is to have 3 to 6 months of your current living expenses set aside for emergency situations. However, this depends on many factors specific to each person’s situation such as, how employable you are, whether or not you carry substantial debt, if you have adequate insurance, if you are a dual income household and/or if you have children.

A Will, insurance and an emergency fund should be seriously considered by everyone.  If you find it a bit daunting to get the ball rolling, find a trusted financial advisor who can help guide you in the process.  An advisor should not only be able to provide guidance and recommendations unique to your individual situation but they should also have trusted sources to refer you with regards to your Will and putting Powers of Attorneys’ into place.

Start 2011 right, by protecting your loved one’s from hardship when and if, tough times come. And best to do it sooner than later, as we don’t always know nor have warning when things derail us from our intended plan.