Statistics Canada recently came out with some numbers confirming what we already know: Canadians are getting older. Projections show that the Canadian population could hit heights of 63.5 million by 2063. By then, there could be as many as 5 million Canucks over the age of 80, compared to 1.4 million in 2013.
The baby boomers are influencing the trend. Statistics Canada defines boomers as people who were born between 1945 and 1965, and by the time the youngest boomer turns 65, that'll mean nearly one-quarter of Canadians will be 65 and over in 2030. Only 15.3 per cent of Canadians were in that age bracket in 2013.
So what does this mean?
Christopher Ragan, professor of economist at McGill University worries about the financial impact.
"The aging of Canada's population, caused both by increasing longevity and falling fertility rates, will create serious fiscal challenges over the next few decades," writes Ragan, in a recent report for the C.D. Howe Institute. "This 'fiscal squeeze' will see significant increases in the share of national income devoted to age-related expenditures such as healthcare and elderly benefits."
How future governments handle an aging population is anyone's guess, but there are things that baby boomers can do today in order to protect themselves tomorrow. The Vanier Institute recently reported that the insolvency rate for those over 55 is moving upwards and seniors were 17 times more likely to become insolvent in 2010 than they were in 1990.
Consolidated Credit offers the following tips on how Canadians can get their financial house in order before they move to the retirement cottage:
• Assess your future -- There's an old rule of thumb that Canadians will need about 70 per cent of their pre-retirement income to live comfortably in retirement. But maybe that rule needs a rewrite -- "real life" is very unpredictable, and it's hard to budget with much certainty. People are living longer, seniors are traveling more, and adult-children sometimes find themselves moving back home. Try using Service Canada's Retirement Income Calculator to get a better understanding of your financial future.
• Eliminate credit card debt -- If you have unsecured credit card debt, make it a priority to pay it off before you retire. High-interest credit cards can be very hard to manage on a fixed income. If you have multiple credit cards now, keep one or two with the lowest interest rates and pay off the others before you retire.
• Decide where you want to live -- If you are planning to move after you retire, put some careful consideration into the cost of living for that area. Look into the cost of real estate and see how far your money will stretch if you downsize from your current home. If you're moving to a different town or province, it's also worth looking into potential tax advantages for senior citizens in that area.
• Invest in your health -- Saving for retirement is often focused on enjoying your golden years, but Canadians also need to consider unexpected health issues that could come up in old age. Depending on where you live in Canada, the cost of private health care can range between $2800 and $9000 per month. Focusing on your health is your best shot at reducing the need for assisted living facilities. Regular exercise, a healthy diet, strong community ties, and activities to keep the mind active will go a long way.
Like any long-term plan, retirement tomorrow requires diligence and discipline today. It may seem like retirement is in the distant future, but getting started early will put you on the path toward a long and comfortable retirement. And don't forget -- if Statistics Canada's population projections are accurate, you'll have lots of company!
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