Unexpected Retirement Expenses
According to a recent CIBC poll, nearly half (48%) of retired Canadians stopped working sooner than they expected. The result is that many retirees have saved less for retirement than they planned, making unexpected retirement expenses all the more stressful once the income tap has run dry.
But you know what they say, preparation is the best protection against the unexpected. And with that in mind, here are the unexpected expenses that many retirees experience that you can plan for.
Home maintenance and upgrades
Just like with our own bodies, homes require ongoing care and have unexpected breakdowns. That’s why it’s important to do regular check-ups and budget for the unexpected, as well as the expected.
Whether it’s replacing the roof, furnace, or appliances, or upgrading your home to be more accessible as you age, it’s important to plan ahead for how you will cover the costs of keeping the home you love safe, beautiful, and suited to your needs. Luckily, there are options like the CHIP Reverse Mortgage that can provide the funds to help you take care of your home without making monthly payments or affecting your OAS or CPP.
Personal and family emergencies
It’s sad to say, but most people at some point in their lives will have to deal with a sudden emergency. Whether it is needing to travel to see a family member who has had an accident or illness, people you love may need financial assistance during a trying time. The costs of dealing with such an emergency can be as draining on your finances as they are on your emotions.
Many financial institutions and advisors recommend setting up an emergency fund with 3-6 months salary. Of course, this means you would need to plan ahead and set up the fund before retirement. You can use the emergency fund calculator from Practical Money Skills Canada if you need to get started.
Frauds and scams
Between January 2014 and December 2017, Canadians lost more than $405 million to fraudsters. What’s more, these criminals largely target elderly citizens, with $94 million of that sum coming from Canadians aged 60 to 79. And with the growth of the digital age since then, there are now more opportunities for fraudsters than ever before.
No one is expecting to be scammed, but many retirees experience significant financial hardship due to fraudulent crimes. To help you avoid, detect, and report fraud, HomeEquity Bank has recently launched Catch the Scam, a series of online classes led by Frank Abagnale, the former conman whose life inspired the film Catch Me If You Can. Frank now works as a consultant with organizations including the FBI to help tackle fraud, forgery, and embezzlement. Watch Frank’s Catch the Scam video series to see how you can avoid Canada’s most common scams.
Living longer than expected
While a long life is truly a blessing and something to celebrate, Canadians now live longer than ever. One result of this is that some of the financial advice being given today do not account for the realities of tomorrow. Of course, any retirement plan needs to begin with when you plan to retire, and end with how long you can realistically expect to stay retired.
Many Canadians are realizing that they will live longer and experience higher health costs toward the end of their lives. In order to be fully prepared, it’s important to over-plan to ensure you are fully covered for the (extra) long term.
Investment losses
Investments have a cycle with peaks and valleys, toward retirement most people tend to shift towards safer assets such as GICs. However, there is a level of risk for any investment. Make sure your investments align with the risk you’re willing to tolerate, and that you have access to extra funds. For instance, a reverse mortgage is an ideal option for many 55+ Canadians, since it’s tax-free, unlocks up to 55% of their home equity, and requires no monthly mortgage payments.
Contact your DLC Mortgage Broker to find out more about how the CHIP Reverse Mortgage can help you prepare for the unexpected in retirement.
