FRIDAY, FEB. 10: If a scientist could create a pill that allowed you to live another 10 to 20 years thus extending your life span to 110 to 115 years, would you take it?
Well I can certainly answer that question.
No, I would not!
It doesn’t matter whether the quality of life is there or not; financially I couldn’t afford it.
The issue isn’t about living; it’s about financing your lifestyle beyond your working years.
So what happens when you decide to retire at age 65 and you are still healthy at age 95?
Well, first of all, it would be great news that you made it that far however, it would also mean that almost one-third of your life would be in retirement and for the majority of people in that situation, it means that very little is left in savings to finance retirement beyond those years.
The risk of persons outliving their savings is increasing because the average life expectancy of both males and females is on the rise.
With people now living well beyond the age of 90 and with the cost of living continuing to increase, it is essential to plan retirement income.
Have you had a chance to think about what would happen if you ran out of money at age 94 but required nursing care? Who would pay for that?
If you think your children or the Government will fund nursing care costs at approximately $87,000 per year, you just may get a rude awakening at the worst possible time. The only person who is going to fund your retirement is you!
Remember there are no comebacks or second chances if you haven’t covered everything or even anything.
It’s essential to spend the time now making sure it’s being done properly.
Budgeting for retirement is absolutely necessary.
As you near retirement, start working on a budget. You need to be sure that you will have enough money to make good on your financial obligations and meet your retirement goals. When drafting a retirement budget that works for you, take a realistic look at your current finances, current capital and precise sources of income during retirement.
It’s wise to overestimate expenses rather than underestimate, making sure that you adjust for inflation (the rising cost of goods over time) during your retirement.
Remember to include the cost of necessities like food, utilities, transportation, pets, medical expenses, gifts or contributions, entertainment, travel, personal care and clothing.
You must also determine the growth of your savings, currently and during retirement, as well as all sources of income that you expect throughout the retirement years.
Setting the age at which you plan to retire allows you to calculate the amount of your pension benefit that you will receive when you reach that age. The main sources for retirement income tend to be a private company pension and Government social insurance.
Enjoy
The company pension benefit is greater the later you retire.
However, it is always good to supplement these pension benefits with a healthy savings account in order to enjoy your retirement years.
With so many considerations and concerns regarding retirement planning, working with a retirement planner can be reassuring.
They will help you to project your expenses, determine the sources, identify any shortfalls now or over the course of retirement and implement a plan, which will provide you with all the tools you need to create a comfortable retirement. Knowing what needs to be done today and anticipating tomorrow will make the transition from a life of working to retirement that much easier.
Carla Seely is a senior wealth manager at AFL Investments. She may be reached at 294-5712 or cseely@aflinvestments.bm.