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Gemma

Dear Gemma — it might be enough. You will now be receiving your OAS and CPP, plus any LIRA/LIF income from company pensions. The fact that you own your condo free and clear and have no consumer debt is also a very good thing. Let’s talk about the costs of aging since I know many Canadians may also be wondering if they have saved enough as well.

If we look at the time you will be retired based on a standard life expectancy for a single woman, you would need to plan for about 25 to 30 years (that would make you 91 to age 96). 

Planning for out-of-pocket expenses must be something you keep in mind as you age. 

The three most common expenses for seniors today are dental, hearing loss and vision.

I know many will think these are unimportant, but these needs can lead to many other issues if overlooked or ignored. Thankfully, the Canadian government has many programs available for their aging population.

The Canadian Dental Care Plan (CDCP) is available for all seniors over 65 and children under 18. Aging is hard on the teeth, and everyone should go to the dentist once a year to ward off tooth decay and oral cancer. 

Hearing loss as you age doubles your risk of dementia and severe hearing loss makes dementia five times more likely to occur. Almost 50 per cent of Canadians over 75 have significant hearing loss. 

In Ontario and Alberta, seniors are covered for hearing aids, and other provinces have different programs; for example, Manitoba seniors receive $2,000 toward hearing aids — so it’s a good idea to check what is available where you live.

The days of the obnoxious, oversized hearing aids are now gone. Today, you can join conversations using a small, discrete hearing device. 

Glasses are a fact of life for most seniors, and the Canadian government helps out with this expense, too. Here is a link for those interested.

The key to not running out of money for all seniors is to find ways to create multiple income streams and keep your expenses to a minimum.

And this should be easy enough to do since, by the time you get to retirement, you really should not need to buy the “big stuff” anymore. 

The government security benefits will make up one stream of income, but then you will need to find more. This could include a part-time job, having a boarder in your basement, company pension plans, rental income, RRSPs and TFSAs, or annuity strategies. 

As a single in retirement with small retirement savings (less than $400,000), why not consider a straight-life annuity that protects against longevity risk and will provide a guaranteed income for life?

A solid fixed, straight-life annuity with a good rate of return would be a great option for you, Gemma.

The annuity will provide you with a guaranteed monthly income for life from your $120,000 investment. 

My worry would be that you might make excessive withdrawals from these savings in retirement for expensive hobbies, travel or just simply increasing your lifestyle, and then find the funds deteriorate faster than you thought. 

The annuity will provide you with a lifelong income around which you can plan your new retirement budget (along with other incomes: pension, OAS, CPP, etc.).

Another tip before you retire would be to take out a secured line of credit on your condo. 

I know you don’t need it, but having this available in the event of an unseen emergency will make it easier to use some of your home equity if you are short on funds.

Good planning and forward thinking will always ensure you live comfortably your way.

Good Luck and Best Wishes,

Money Lady