margaret janeckiby Margaret Janecki, EPC, Independent Advisor

Canadians who aren’t financially prepared to retire, typically say they’ll work longer to increase their retirement savings.

But if a serious health event forces them to leave the workplace and retire early, they may not have a choice.

According to the 2014 Sun Life Canadian Health Index, conducted by Ipsos Reid, the following was revealed:

45% say they’ve experienced a significant health event.

Among retirees who have had a significant health event, 45% ended up retiring for personal or medical reasons.
Of those who have had a significant health event, 26% have experienced some financial hardship and 16% have experienced significant hardship.
25% of those who have had a significant health event have reduced or depleted savings as a result.

Although Canadians cite deteriorating health as a top concern as they age (66%), only 22% have saved money or have otherwise planned for extra health-care expenses in retirement.

Getting professional financial advice makes a difference to be able to take care of their medical expenses in retirement.

By including a part of their savings for premiums toward health insurance (critical illness insurance, long term care insurance, personal health insurance) a cushion is provided, thus softening the impact of health risks on their financial and retirement plans.

The alternative of not having these products could shock their portfolios, resulting in:

  1. Severely reduced or depleted retirement savings, including unexpected withdrawals from bank accounts, segregated funds, RRSPs, TFSAs, etc…
  2. The use of other assets, such as real estate.
  3. Lifestyle changes to reduce spending.
  4. Delayed retirement or forced early retirement.

Seniors can decrease the risk of outliving their money by diversifying their portfolios by including products that provide lifetime guaranteed income.

Great examples of this are a payout annuity and / or alternative investments in the private markets such as Syndicated Mortgages and Private Bonds.
Margaret Janecki