Impacts of Increase Life Expectancy Creates Serious Implications to Retirement Planning in Canada

Older workers have been increasingly delaying retirement since the mid-1990s, according to a recent Statistics Canada report. This is because of increases in Canadian life expectancy and even the Canadian Government has plans to raise the retirement age in Canada from 65 to 67 years old. 

This will have serious implications to Canadians because they will have to be even more financially prepared if they plan to retire comfortably and maintain their standard of life.  

Your choice of when to retire will impact your retirement planning in Canada and needs to be considered long before retirement occurs. According to Statistics Canada in 2008, an employed 50-year-old could expect to work an additional 16 years, about 3.5 years longer than workers of the same age in the mid-1990s. But working longer doesn’t necessarily mean a shorter retirement because of longer life expectancies. In 1977, men could expect to spend 11.2 years in retirement. In 2008, the expected length of retirement was 15 years.  

In 2010, the Canadian Health Institute for Health Information reported that while Canadians older than age 65 account for less than 14% of the Canadian population, they consume nearly 44% of all health care dollars spent by provincial and territorial governments. In 2008, the latest available year for data broken down by age group, provincial and territorial governments spent an average of $10,742 per Canadian age 65 and older, compared to $2,097 on those between age 1 and 64. Within the senior population, spending varies widely by age group, with health care expenditure on seniors age 80 and older, at an average of $18,160 per capita, more than three times higher than for seniors younger than age 70 ($5,828 per person on average).  

These statistics only consider health care spending with respect to health care services covered by government health care. These statistics do not consider other expenses like prescription drugs that are not covered by the government, cost of long term care facilities, costs of in-home health care and more. 

In addition to life insurance, your insurance coverage should include critical illness coverage and long term care coverage. This combined coverage will ensure that when the time comes to retire that your long term care is covered as well as critical illness. Critical illness insurance particularly is a great investment because it is so inexpensive when we are young. If you buy a critical illness policy and do not suffer a critical illness you can receive 100% of your premiums back.  If you happen to suffer a heart attack or are diagnosed with cancer, Alzheimer's or another critical illness that many seniors end up confronting with old age, you will receive a lump sum pay out which will go a long way when it comes to paying for treatments and care.

It is no secret that the later years in life are the ones where people experience increased medical problems requiring more support. The cost of retirement planning later in life becomes much more expensive so it is important, just like when RRSP planning, that you consider the insurance coverage you will need once you retire, well ahead of retirement.

For more information about retirement planning in Canada please call Gary Mandel at 416-849-1653 or visit www.wecoveryou.ca.