We are living longer and not saving. Let’s change that

by. Anita Saulite

All of us seek financial security. Retirement may be one of the longest phases of our lives. Some of us could live to age 100 and with the average retirement age of 67 would mean 33 years of retirement living. Having a savings plan for a long life is a prudent strategy.

There has been much written lately about longevity and longevity risk which for most us doesn’t mean much unless you understand it’s relevancy. Longevity risk is the (horrible) notion of running out of money in retirement or the “bag lady syndrome — being homeless and broke in retirement because we have outlived our money (not my favorite way to talk about retirement).” What can we really do about it? More than you realize today.

Canadians are living longer and planning for a long life has never been more relevant. It’s a defacto standard. The average life expectancy in Canada for women is 84 and for men is 80. For most of us living your best life today matters. Many of us are burdened by the high cost of living, wages and incomes are not growing and personal debt is at an all time high. It’s a challenge to know what to do with our discretionary income (money left over once all our fixed living expenses are covered) when our money demands so much of us. How do we afford paying down/off our mortgage? Saving for our children’s (our own) education? Making a major purchase? Renovating the kitchen and/or bathrooms? Saving for retirement?

For most of us planning for retirement is the last thing on our mind. It isn’t top of mind unless you find yourself in the retirement corridor and that’s all you can think about. For the rest of us it is hard to envision our future self — getting older — and maybe that is why only approximately one quarter of eligible Canadian tax payers contributed to a retirement savings plan. Approximately half of Americans are not saving for retirement. Because when we start to think about our future self it can create undue anxiety and stress because this means we have to acknowledge we are getting older. And who wants to get older except a 10 year old?

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