Why living longer matters now

Thanks to healthier living and medical advances, Canadians are living longer than ever before. The new longevity means planning for a retirement that may last 20, 25 or 30 years—perhaps even longer.

According to the FP Canada Standards Council, a 50-year-old female has a 50% chance of living to age 92, and a 50-year-old male has a 50% chance of living to 89. A 50-year-old couple has a 25% chance of one spouse living to 98.¹ Longer life expectancies mean you need to plan to fund your retirement lifestyle for more years, and the cost of living isn’t the only factor to consider.

Here are three other longevity risks we think about as we develop your wealth plan.

1. Accounting for inflation

Investors understandably worried in 2022 when inflation in Canada reached 8.1%, a 40-year high. But the return to the Bank of Canada’s target rate doesn’t mean inflation can be forgotten. Even a relatively low inflation rate can have a significant impact on your savings. To illustrate, $100,000 in savings would have purchasing power equal to $67,297 after 20 years at a 2% rate of inflation (assuming no growth in savings).

2. Covering health care

The longer you live, the greater the likelihood that you or your spouse will develop a medical condition that may require health care at home or in a long-term care residence. Almost three in 10 Canadians aged 85 and older live in a facility providing care and support.²

Government support only goes so far, and long-term care is expensive especially if you would like a private health care residence or private nursing at home.

3. Helping your family

The longer you live, the more chance you have of unexpected situations arising that may have financial consequences. For example, a child could go through a divorce and require financial support or a grandchild might have special needs and you may wish to fund a Registered Disability Savings Plan (RDSP).

Planning for longevity

Managing the financial side of living longer can start well before retirement.

Inflation is a matter we address in two ways. Your investments, especially low-risk investments, are selected with the impact of inflation in mind. Also, your retirement savings goal accounts for a projected rate of inflation throughout your retirement years.

Should you wish to cover potential long-term care expenses, you can purchase insurance that covers care at home or in a residence, or set aside funds to meet this need. Note that long-term care insurance becomes more expensive when you purchase coverage at an older age. When you set aside funds, you may wish to dedicate a Tax-Free Savings Account (TFSA) or non-registered account specifically to this purpose. You could fund it with a portion of your paycheques or with larger deposits, such as your annual bonuses or freed-up cash after you pay off the mortgage. If you’re fortunate enough to not require long-term care, funds in the account could become estate assets.

You may also wish to start an emergency fund for retirement, which would cover any family needs and unexpected expenses.Ultimately, longevity planning helps you arrive at a financial goal and retirement date with sufficient resources to achieve your desired retirement lifestyle without worrying about outliving your savings.

Physical activity tips for seniors

Regular physical activity is important to your health, well-being and quality of life. These guidelines can help you improve and maintain your health by being active daily.

Aerobic activities

Engage in at least 2.5 hours of moderate to vigorous aerobic activity each week, with each session lasting 10 minutes or longer.

Examples: walking briskly, cycling, jogging, dancing, cross-country skiing, swimming

Strengthening activities

Add muscle- and bone-strengthening activities at least twice a week.

Muscle-strengthening examples: lifting weights, push-ups, climbing stairs

Bone-strengthening examples: yoga, walking, jogging 

Benefits

Aerobic and strengthening activities can improve your health in a variety of ways:

• Help prevent high blood pressure, stroke and heart disease
• Improve balance and posture
• Reduce falls and injuries
• Stay independent longer
• Keep muscles strong and prevent bone loss

Tips

• If you’re not active now, start slowly and gradually increase your activity
• Choose activities you enjoy
• Look for group activities or classes in your community
• Walk wherever and whenever you can

Consult a health professional if you are unsure about the types and amounts of physical activity that are most appropriate for you.

 

¹ Institute of Financial Planning and FP Standards Council, “Projection Assumption Guidelines,” 2024.

² Statistics Canada, “A portrait of Canada’s growing population aged 85 and older from the 2021 Census,” 2022.

 

Source: Public Health Agency of Canada