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Retirement living is not free, but it is affordable. It is best to plan early and save for your retirement so you can maintain your quality of life. At first glance, some retirement home options may seem quite costly. However, if you consider your current expenses, you may find that there is little difference.
Here are some things to consider in your financial assessment:
- Level of savings and investments available
- If you'll be selling a property, will the proceeds from the sale be used towards your retirement?
- What is included in the retirement residence costs food, outings, activities, amenities, etc. and how much do you spend on them now?
- You may qualify for government-funded home care services to ease the costs of additional fees
Facts about most people’s retirement savings
According to the Ontario Association of Non-profit Homes and Services for Seniors, a woman retiring today at 65 can expect to live another 19.9 years on average, while a 65-year-old man has an average of 16.1 years ahead of him. As we move into our 80s, the likelihood increases that we will need the services offered by a retirement residence or a long-term care facility.
RBC Insurance says people 65 and older account for 50 per cent of hospital days and almost 100 per cent of long-term care days. Manulife Financial points out that one in five Canadians who live in a nursing home stay for longer than five years.
A retirement home can be expensive but there's no doubt we can enhance the quality of our retirement by preparing.
How much is enough for retirement?
In the past, financial advisers used 70 per cent of pre-retirement income as their rule of thumb for how much money we need to live in retirement as we did when we were working. But now they are taking a more sophisticated view of retirement.
Advisers are suggesting we look at retirement as a three-stage process, with different financial requirements.
The first stage covers roughly 65 to 75 years of age, when we are generally active and healthy and we get to live some of our dreams.
The second stage sees us staying closer to home, often with a spouse experiencing declining health and requiring some home care. In the final stage, one or both of the partners requires the 24-hour nursing care provided by long-term care facilities.
Another important consideration is "life planning." You really can't decide how much money you will need in retirement until you decide what kind of retirement you want. If you plan to sell the big house in the city and find a quiet country home where you can indulge your passion for gardening, your retirement needs are going to be very different from those of a senior who wants to spend four months skiing in British Columbia and the rest of the year enjoying the sunshine on Italy's Amalfi coast.
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