Sure, it’s important to make certain you’re covered “in case something happens.” You want to ensure you have the insurance you need (better get on it if you’re one of us who tend to procrastinate about such things). An emergency reserve fund might also come in handy (you never know). And of course you’ll want to make all the proper “arrangements” so when the time comes, things are a little easier on your family.
But what if something happens that isn’t bad, but instead is good? Well, it can still make sense to plan for it.
What if … you live to 100?
That’s definitely not a bad thing, right? Especially if you’re one of the fortunate ones to stay bright-eyed and bushy-tailed right to the end. It’s not out of the question. According to Statistics Canada, if you’re 65 today, you can expect to live another 20 years on average. There are more and more people living well into their 90s, and even becoming centenarians.
And that means more than just getting a 100th birthday greeting from Her Majesty The Queen (but for more on that, please visit the Governor General of Canada’s website). It also means you may need to make your retirement “nest egg” hatch a few more golden eggs – enough to last until you’re 85, 90 or even 100 depending on your individual situation. So, it may be time to dust off the old financial plan, and update those retirement income calculations with new life expectancy figures to ensure you will have enough to last as long as you need to live your life the way you want.
We can help – ask your advisor about updating your financial plan, especially if it’s been a few years.
What if … you can retire early?
For some people, work is life, and the thought of retiring early to sail around the world or watch exotic birds isn’t exactly inspiring. But that’s just for some people. For others, bring on the bird-watching! And what better time to pursue such pastimes than the decade before the traditional retirement age of 65?
But it does raise a slightly more serious point. Retiring early just because you can afford to, or just because you can afford to and you hate your current job, may not be the best reason. Before you release the “escape pod,” consider how you’re going to spend your days (nearly 13,000 of them if you retire at 55 and live until 90). People need meaning and purpose in their lives, and simply kicking back on the deck with the fanciest high-magnification bird-watching binoculars may not be enough.
Just a thought: You may also wish to run this idea by your partner (in advance). “Honey, I retired today … so how are you going to entertain me?” may not go over as well as you’d hoped. Your early retirement affects your partner, and could turn their world upside-down. So it’s a good idea to have a little chat, and to make sure you both have a shared vision for your early retirement.
Finally, consider whether you actually will have enough money (especially since you may be sailing – or cruising – the high seas into your 90's). Before you take that early retirement, crunch some numbers and make sure it all adds up, particularly if you’re planning a very active early retirement filled with more expensive “bucket list” items like world travel. So talk to us first – we can help you crunch the numbers and run some scenarios.
What if … you just have too much money?
To quote the late hip hop artist, the Notorious B.I.G., “Mo’ money, mo’ problems.” But admittedly it can be a nice problem to have.
Whether you’ve built your wealth over time or come into it suddenly through an inheritance, you may wish to “do something” with it beyond simply having that much more extra financial security. Like investing according to your values. Helping your family get established in life. Creating a legacy that transcends generations. Giving back to your community in a meaningful way. You know: making a difference.
All good! But how? There are several strategies to pass your “excess” wealth to the next generation in a well-coordinated, tax-efficient way, including family trusts and tax-exempt insurance. We can also help you consider your options when it comes to charitable giving, and assist you in setting up your own charitable gift fund as an enduring family legacy.
For more information on preparing for all the what-ifs in life (good and bad), please contact your advisor.
The above article was written by Bal Russell and printed in the January 2020 Wealth Management Review newsletter.