Retirement is much more expensive than what many people estimate as they navigate through life. Changes to the economy have changed the employment landscape in Canada. It used to be that you would land a job in an organization with a goal to advance in your career within the organization, potentially work there for 20 or 30 years and then retire with a health pension. These types of jobs have disappeared.
More and more companies are hiring employees on contract and eliminating their older workforces to avoid high pension costs. People can no longer count on job tenure to finance their retirement.The makeup of our working population and household composition has also changed. HRDC published a study that highlighted a spike in the proportion of employees who are caring for both elderly family members and have children at home. This instance has increased to 15% when compared to a rate of 9.5% a decade ago. In addition, the aging workforce (from 55 to 65 years old), over the next 10 years will increase by more than 50%. This will put tremendous strain on the Canadian Health Care system in addition to CPP and OAS as well as corporate pension funds. This may be one reason that companies are shedding their older workforces and moving away from long term, permanent position opting for contracted workers.
What does this mean to you? Well you would be remiss to ignore these emerging trends because the impact to you when the time comes to retire will be severe. Upon retirement (age 65) the current monthly CPP entitlement ranges from $527 to $986 per/mo. OAP payments range from $510 - $540 per/mo.In the absence of a pension plan offered by an employer or other financial planning, this is not enough money for most Canadians to live off of and maintain the same standard of life that they enjoyed when they were employed. In addition, it is a fact that most people begin to suffer with health problems later in life. When health problems emerge the low income offered by the government upon retirement is not sufficient enough to cover health care costs that are not covered by government health care like some prescription medications, treatments and in home health care.
Independent Financial Concepts Group recently released an illustration that highlights the cost of food to support 2 people who eat 3 meals per/day at an average of $10 per/meal for 365 days over 20 years. The amount that would need to be saved for food alone totals $438,000! This does not even include transportation costs, housing costs and medical expenses.Canadians must consider their financial planning long before their retirement. This includes a combination of investment and insurance planning. Working with an insurance advisor, you can consider a plan that could include long term care insurance, disability insurance, critical illness insurance as well as whole life insurance products to ensure that you are in tip top financial shape when retirement time comes. The younger you are, the cheaper the cost of insurance planning will be so the sooner you start the better.
For more information about retirement planning in Canada please contact Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca