During this week I listened to a CBC radio program on aging in Canada. Part of the program featured telephone calls from retired people from across the country. Many comments were heart wrenching with stories of arbitrary reductions of company pensions, attempts to live on Old Age Security and Canada Pension Benefits, concerns about failing health, lack of home care, and stress on family care=givers. The program left me to ponder the real needs of retirement.
Concerns identified during the CBC program centred on two major issues — financial security and health security. How does one prepare for either of these when so many factors may be well beyond an individual’s control ?
This blogger does not purport to give specific financial advice to postworksavvy readers. Everyone needs an individualized financial plan and professional financial expertise to help to develop such a plan. Ideally this plan evolves over a period of many years, long before retirement. Along with the professional advice, some common sense will help any financial plan — eliminating debt especially credit card debt and mortgage debt. Making a realistic spending plan based on estimated retirement income is essential. There is no shortcut — you have to spend according to your income.
Hopefully, the plan will have sources of income beyond the support offered from governments such as Old Age Security and Canada Pension. If not, a lifestyle based on extreme frugality will be needed. Perhaps some form of semi-retirement where income from part-time work supports the lifestyle could be considered if pre-retirement financial arrangements are insufficient. For those with inherited wealth, investments, savings, indexed pensions or other sources of retirement income, lifestyle choices offer more options — second and third homes, club memberships, travel, and greater freedom from day-to-day financial worries. People in this later category of financial security are able to focus on living the dream and not worrying about day-to-day finances.
Only a lucky few will avoid health issues as they grow older. It is an unfortunate fact that regular trips to physicians, dietitians, physiotherapists, pharmacists, chiropractors and hospitals are more common as we age. Preparation for those inevitable health issues needs to form part of every retirement plan. For Canadians, universal health insurance forms a good foundation but most retirees still require additional coverage for prescription drugs, dental care, in-home nursing and other non-insured expenditures. Self care through regular physical exercise and a healthy diet are no-brainers.
In planning for post-retirement health, most people first consider physical health. But emotional health is equally important. Maintaining a positive outlook, nurturing family networks, keeping an active social life, and continuing those activities that provide a sense of accomplishment are all important factors in assuring emotional well-being.
Good genes, good luck and good insurance need to form part of the postworksavvy plan. It won’t be bullet proof as health security can never be assured but it can be planned to cover some of the unavoidable health surprises.
Dealing with the basic issues of financial and health security to the extent possible allows the postworksavvy some level of freedom — freedom to build a retirement lifestyle that is healthy, fun and full of possibilities. Your retirement won’t be risk-free — but nor is any aspect of life.
- Family Finance: Double income, no cash (financialpost.com)