How does retirement planning affect our lifestyle?
Retirement is an ineluctable stage when there will no longer regular paychecks and one needs a realistic emergency fund to meet the unexpected demands of personal health issues. There is no statistical validity, but they design every retirement pension plan to provide a regular income to maintain a regular lifestyle. After the age of 65, there is a significant change in life expectancy, and the income provided through the CPP and OAS may not be enough to maintain the household’s standard of living in retirement. For example, Mick’s pre-retirement income is $75,000 per year, and he needs to invest in personal savings and/or workplace pension plans to have an additional $33,329 per year to maintain the standard of living in retirement.
- GIS – provides supplemental income to Canadians
- OAS – provides a monthly benefit.
- Canada Pension Plan – provides a monthly benefit to people who have contributed to this publicly administered plan
- Personal savings – RRSPs, savings accounts, investments, and home equity
An expert’s advice, the one should set the aim to have 50-70% of their pre-retirement income into their investment funds to maintain a certain lifestyle. At first, it seems to compromise with the current lifestyle to have a comfortable future. This has put pressure on any individual but if a retiree will not have a savings account or made the withdrawal of large amounts from the tax-deferred pension plan, it may force them to change their lifestyle. You can’t plan for everything, but “Prevention is better than cure” Our biggest concern here is to enroll for the right pension plan that provides incomes after retirement. There are so many factors that can materially affect your retirement status, lifestyle, and quality of life like healthcare emergency, higher-education for children, divorce or separation, death of loved ones or other financial adversities. In cases of divorce or separation, public and private retirement plans and individuals’ disposable income by splitting marital assets will affect their lifestyle. Although divorce rates among older couples are far lower, it is not uncommon for a retirement-age couple to get a divorce. Death of a loved one’s or a spouse’s death will bring additional financial burdens including lingering medical bills to the funeral and debts to the mortgage. It’s always beneficial of having pension plans that provide lump-sum payments to meet major expenses like the unfortunate event of a death. There are lots of plans available to protect you and your family after death, such as life insurance, survivors’ pensions, and long-term care insurance. Older people usually have greater healthcare needs and may require frequent treatment that increases the danger of running out of money. The downside of living longer increased the exposure to financial risks that planning for only enough income expectancy will be adequate for about half of retirees. Being cautious and spending too little might needlessly restrict the lifestyle but the prescription of drugs and health care services will devastate the lifestyle more than ever expected.
