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
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