Planning to live to 100
Not that many years ago, living to 100 seemed an impossible dream. Not anymore.
Population projections tell us that centenarians, those aged 100 and over, rose 87.7 per cent between 2004 and 2011 — and the number of centenarians is expected to triple or quadruple by 2032.
What all that means to you is this:
You should not only reasonably expect to enjoy a much longer life, you should also begin planning for all those extra years of retirement right away. After all, you will want to be sure your income will extend for the 20 years beyond retirement that today's 65-year-olds can expect to live, on average.
Start your income longevity planning with these tips:
• Decide on your desired retirement lifestyle.
• Add to your Registered Retirement Savings Plan income with a complementary portfolio of investments that are eligible plus non-registered investments.
• Assess your projected spending for essential and discretionary expenses and adopt an investment strategy that will match your spending needs. For example, plan to meet such essential expenses as housing, food, clothing and medical treatments for longer than your life expectancy; plan to spend an increased amount for discretionary expenses like travel, dining out and a new car during the first ten years that diminishes thereafter.
• After retirement, manage your retirement savings withdrawal rate based on the size of your retirement savings, the average return on your investments over time, and the number of years you plan to make withdrawals.
• Use life insurance to shelter excess capital and maximize the value of your estate; consider a life annuity that will provide a guaranteed regular income no matter how long you live.
• Protect your income (and your spouse's) with life insurance and supplementary health insurance including disability, critical illness and long-term care coverage.
• Revisit your plan regularly to assess investment performance, changes in expense levels or any other factors that can impact on how much you can spend in retirement for how long.
Ask your professional adviser about how these and other income longevity strategies can help make sure you enjoy a comfortable retirement for a long time.
J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.