The risk of living longer
No two people are exactly alike; that’s why it’s so difficult to answer the question, “How much do I need to save for retirement?” Things to consider before answering this question include:
- At what age did I start saving for retirement?
- How much and how frequently do I save for retirement?
- At what age do I want to retire?
- How long do I need to live off my retirement savings?
The medical advances helping Canadians live longer and healthier lives directly impact retirement savings. If you aren’t disciplined about saving, you run a risk of outliving your retirement nest egg. That’s why it’s important to accurately predict how long Canadians will need to live off their retirement savings.
According to Statistics Canada, Canadian women and men are living 2.5 to 3.5 years longer than they were 30 years ago. Numbers like these influenced the federal government to push out old age security (OAS) by two years, to age 67, by 2030. But planning for living a long time isn’t only the government’s responsibility − it’s also your responsibility.
Preparing for longevity: Mr. Smith
Our fictional group plan member, Mr. Smith, is 65. Lower investment returns and delayed retirement planning have limited the growth of the $500,000 Mr. Smith has set aside for retirement savings. He would like to know if postponing retirement until age 67 will affect his monthly retirement income.
Don’t be like Mr. Smith. Start early so you can increase your savings and avoid outliving your retirement nest egg. Proper planning can benefit you when your retirement savings are transferred to retirement income products, such as life income funds or annuities. If you’re a Great-West Life group plan member, use resources like the Plan your retirement tool on GRS Access to see how a little planning can make a big difference to your future.