Planning for retirement is getting more complex
February 15, 2018
Historically, when thinking of retirement, the key question was whether you had enough money to support your desired lifestyle for the rest of your life. The fear being you would run out of capital.
Statistics Canada reports that Canadians are living longer, and estimates 20 per cent of Canadians will be 65 years of age or older by the year 2024. With a large part of the Canadian population aging and entering retirement, there is now a new question — will you run out of mental capacity?
Diminishing mental capacity as we age is normal. The longer you live, the more chances you have of developing some form of cognitive deficiency.
There are a number of reasons why someone may have impaired cognition. Dementia is one of them, and is the leading cause of disability among Canadian seniors. According to the Alzheimer Society of Canada, an estimated 564,000 Canadians live with a diagnosis of dementia, and 15 years from now there could be as many as 973,000.
For many, early retirement can be expensive due to an active lifestyle that may include travel. During middle retirement things tend to slow down and spending is reduced.
The last part of retirement can also be expensive, but for different reasons. Many people will need assistance, either at home or in an expensive retirement home.
The annual cost to care for Canadians living with dementia, including Alzheimer’s disease, was approximately $10.4 billion in 2016, and that number is estimated to go up by 60 per cent in the next 15 years.
Most people, despite their financial wealth, worry about running out of money and having to adjust their standard of living.
Financial planning can be difficult, as so much of the future is unknown. Particularly life expectancy. As we live longer, cognitive deficiency is going to be more prevalent, so planning for a future potential incapacity should be a financial priority.
One way to do this is to make sure your powers of attorney are reviewed, and updated, as your personal circumstances change.