Don’t let your retirement assets wash away

It seems like every week there is a news story about massive flooding happening somewhere in the world. It is heartbreaking to see the devastation as people’s lives and homes are destroyed in a matter of minutes without warning.

I saw one particularly sad story where a retired couple lost everything they had worked for their entire lives. It reminded me that floods aren’t the only danger to our hard-earned assets. While the whims of mother nature may be out of our control in these kinds of disasters, there are things new and future retirees can do to protect themselves and their retirement life savings from being washed away.

Most notably, taking care of our health.

You may not have considered the impact that medical expenses in retirement could have on your savings, especially if you have had the benefit of an employer health plan while you are working. Some of us will lose those benefit plans when we retire, and even with universal health care, medical costs can add up.

According to a BMO Wealth Institute report, Canadians expect to spend an average of $5,391 in out-of-pocket medical expenses every year after the age of 65 – that’s a whopping $135,000 if you live to be 90 and remain in relatively good health!

Older Canadians spend about $7.5 billion a year on prescription drugs for chronic health problems which require regular medication. And, if you require assisted care at some point in your life, you could be spending up to $75,000 a year. No wonder 74 per cent of the Canadians think medical costs will be their biggest expense in their senior years.

That’s a hefty price tag that could be offset by maintaining a healthy and active lifestyle. Yet, for many baby boomers, health and wellness have been put on the back burner as we focus our time and energy on maintaining our careers, aging parents, and adult children.

40% of retirees will struggle with day-to-day mobility issues

What’s at risk is the ability to achieve the active and happy retirement we desire. A recent Sun Life Financial survey revealed that 41 per cent of Canadians who retired early cited personal health as the reason. Another survey found that about 40 per cent of baby boomers said it was difficult for them to kneel or stoop, stand for two hours, walk a quarter of a mile, climb 10 steps without resting, sit for two hours, lift and carry 10 pounds, reach over their heads, push or pull a large object, or grasp small items.

That means 40 per cent of us are going to struggle on a vacation that requires some walking, standing or holding onto a rail. It means spending time on the floor or in the yard with grandchildren is going to be painful and limited, instead of fun and engaging. Pastimes like gardening, biking, or watching a movie may also be less enjoyable than before.

The evidence is clear: allowing your assets — first physical and then financial — to wash away due to poor health carries significant consequences. Having a functional body in retirement is of equal, if not more, value than having the proper savings and asset allocation.

What are you doing to look after your body and ensure you stay as healthy as possible in your retirement?

 

 

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