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SOMERS: Retirement dreams and realities for baby boomers

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Boomers are often optimists – but, according to a recent survey, they can also be unrealistic about their health and the state of their finances in retirement.

The survey in the Insurance and Investment Journal found that 97 per cent of respondents described their current health level as good, very good, or excellent and 86 per cent expect to retire in good health – and yet, the survey revealed that 61 per cent of employees over age 50 actually suffer from one or more chronic health conditions. The most common conditions were hypertension, arthritis, high cholesterol, diabetes and mental health problems such as depression or anxiety.

Jeff Somers
Jeff Somers

Where finances are concerned, more than a third of survey respondents reported that they save 10 per cent or less of their current salary for retirement, yet in retirement they plan to withdraw a yearly average of 15 per cent from their savings – or more than four times the typically recommended rate of withdrawal.

The main take-aways from this survey are obvious:

• Many Boomers may need to be more realistic about their health and the escalating healthcare costs they are likely to face in retirement

• Many should save more for retirement

• And, in retirement, they must have a sound financial plan that allows them to pursue the lifestyle they want while ensuring their financial resources will last for all their retirement years

Boomers are rapidly heading toward (or are already in) retirement, but it’s never too late to plan for a secure financial future.

Here are a few tips for doing so that apply to Boomers and, equally, to working Canadians of any age:

• Begin saving as early as possible – and save regularly

• Avoid bad debt that doesn’t generate income or increase your net worth

• Invest intelligently – especially in registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs)

• Be sure that you have adequate insurance coverage for any health/medical challenges that may arise – especially disability, critical illness and long-term care insurance. Keep in mind that healthcare costs generally increase with age

• Have a plan that includes a realistic budget for your retirement years, coupled with a realistic withdrawal strategy. Maintain an emergency fund to deal with any surprises (health and otherwise). Be sure your plan includes a provision for inflation

Most importantly, get advice. Your professional advisor can provide the expertise and realistic assessment you need to create and implement a financial plan that will work for you, regardless of your age, for a lifetime.

Jeff Somers, BA, RRC, CFP works at Investors Group in Charlottetown. This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc. presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances.

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