Two Things That Can Impact Your Financial Plan as You Age

Two Things That Can Impact Your Financial Plan as You Age

When I began working as an advisor almost 20 years ago, the common practice was to run a financial plan to age 90. Since then, that number moved up to 95 and sometimes even 100, thanks to longer life expectancy.

It’s prudent to have a plan that provides for you and tests a scenario where you are blessed with a long life. But that is only part of the equation. It’s not just how long you live, but how long you live well.

There is life expectancy. And there is healthy life expectancy. There seems to be a lot of different ways that “healthy” has been measured and indexed. Some research has considered factors such as vision, hearing, speech, ambulation, dexterity, emotion, cognition and pain. Other research is less specific and has looked generally at “activity limitation”.

The good news is both have increased. People are not only living longer. They are living longer in good health as well. Life expectancy for women in Canada is 84 and for men, it is 80. The Health Adjusted Life Expectancy (HALE) is 77 for women and 75 for men. Put another way, women are expected to live to be 84 on average. And, they are expected to be healthy and free of major limitations until 77, on average.

But these are averages and we know that all of us are above average.

What does this mean for your financial plan? It means that you can expect to have more years of active living. Depending on how you spend your active time, it may mean more years of higher spending. More years of travel. More years of golf, tennis and curling and pickle ball. More years of theatre, film, music, shopping, and excursions with the grandchildren.

But it doesn’t mean fewer years with less activity and less spending. We didn’t swap unhealthy years with healthy ones. We added more years and extended the length of a healthy life. So along with the good news that you’ll live longer and live well, comes the news that your life in those years will probably cost you more. That’s not necessarily bad news. That just means you need to have a strong financial plan.

The good news is, I can help with that.

Book your no obligation consultation now.

Let’s get the conversation started on your financial future today.