All of us seek financial security.  Retirement may be one of the longest phases of our lives.  Some of us could live to age 100 and with the average retirement age of 67 would mean 33 years of retirement living. There is a lot of information about longevity risk which for most us doesn’t mean much unless you understand it’s relevancy.  Longevity risk is the concept of running out of money in retirement. It has been referred to as the “bag lady syndrome – being homeless and broke in retirement because we have outlived our money.” The idea of becoming penniless in retirement is horrifying and doesn’t have to be your reality.

You could live to age 100

Canadians are living longer and planning for a long life has never been more relevant. The average life expectancy in Canada for women is 84 and for men is 80. For most of us living your best life today matters.  Many of us are burdened by the high cost of living, wages and incomes are not growing and personal debt is at an all time high. It’s a challenge to know what to do with our discretionary income (money left over once all our fixed living expenses are covered) when our money demands so much of us.  How do we afford paying down/off our mortgage? Saving for our children’s education? Making a major purchase? Renovating the kitchen and/or bathrooms etc.?

Canadians are saving, but how much is enough?

For most of us planning for retirement isn’t top of mind unless you find yourself in the retirement corridor and that’s all you can think about. For the rest of us it is hard to envision our future self – getting older. But the good news is many Canadians are saving for retirement according to the census and CBC news. The other challenge we face is how much money we need to save to enjoy our golden years. Recent research suggests that a nest egg of $750,000 is required.  For many of us this doesn’t sound like a lot of money, and for some of us the amount is staggering.  The reality is how much you will need in retirement really depends on a lot of variables mainly lifestyle choices, how you plan to spend your time, where you are going to live, health care costs, long term care etc. 

Take the worry and fear out of retirement

So how can you take the worry and fear out of retirement planning? The first strategy is to plan for a very long life.  The choices we make today with our money could have long term implications on our financial security, lifestyle and comfort.  Because life expectancy is a big unknown, we must outsmart and outwit longevity. Worrying and living in fear about running out of money in retirement is self defeating and powerless.  What does create power and a peace of mind is taking action.

If you are in your twenties retirement may seem so far away. And maybe a concept you are unlikely to embrace. But the trick to saving for retirement is to get the time value of money on your side. All of the major financial institutions offer Retirement Calculators to help you map out your retirement savings plan.

If you are in your thirties and forties, you understand how important retirement planning is as you see your colleagues and peers prepare for it. You may have unused RRSP contribution room and could easily augment your savings by getting a RRSP catch up loan or line of credit from any financial institution. And, if you are in the retirement corridor, you may need to consider working longer or making some lifestyle adjustments in retirement.  

So, what’s your plan?

Plan for a long life. Hedge against longevity risk and create a plan that’s right for you.

Post has been modified. It originally appeared in The Huffington Post