Once upon a time, many years ago, $1 Million Dollars was considered enough money to have socked away by age 65 so that one could retire comfortably. This usually included the value of your house and what you might sell your practice for and the RRSPs you had salted away (and maybe selling a kid or two – JOKE!).
In those days (like 30 years ago), men lived to an average age of 72 and women to 78 years old (but looking like only 60 of course!). However, nowadays the estimates are men living to an average of 82 and women to 88 (and looking like only 60 of course!). Many of both sexes are living to 90 and 100 years old and beyond right now. This means we may need to rethink our long term financial planning.
Other factors that need to be considered are:
(1) How many times will inflation have doubled during your future lifespan? For example, if a car is $30,000 now, what will it cost to buy one 30 years from now? $90,000? 30 years ago you could have bought the same car for only $15,000. This means that whatever money you have put away will probably be buying less than half or even a third of what it would right now (depending on how far off your retirement is and how long you plan to live).
(2) And when you retire, do you plan to sit in your house for the next 30 or 40 years and live frugally till you die? Or do you plan to travel and have an interesting life for those years? Lifestyle costs money.
(3) And how much do you need to set aside in case you need to live in a full care facility for the last few years?
(4) Do you really need to retire at age 65? It is not the law in Canada that you have to retire at that age so what is your desire on this point? 25-30 years of play time after you retire may be a bit extreme.
There are probably a lot more factors to think about but I wanted to inspire you to do some planning for your future. Sit down with your spouse and/or your financial planner and do some calculations and see what you come up with. This will then give you some goals to work towards accomplishing.
PLANNING a great future means it is much more likely you will HAVE a great future!
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