Your money may need to last longer than you think, say Canada’s actuaries

• • Canadian Institute of Actuaries marks Financial Literacy Month by encouraging Canadians to plan for a longer life

OTTAWA, Ontario – Canadians are living longer than ever, and their savings may need to stretch further than they expect. This Financial Literacy Month, the Canadian Institute of Actuaries (CIA) is encouraging Canadians to plan for a longer life, so their money lasts as long as they do.

Actuaries are experts who measure how long people live and how financial risks unfold over decades. They design the pension plans, insurance products and public programs that millions of Canadians rely on.

“Financial security for all Canadians starts with a realistic picture of the future,” says Daniel Pellerin, FCIA, President, Canadian Institute of Actuaries. “Many people plan for retirement as if it will last a few years. For many, it can last 30 years or more. A few simple steps today can make a real difference later.”

Five tips from Canada’s actuaries:

1. Plan for a long life. Many Canadians underestimate how long they will live. According to Statistics Canada, life expectancy at age 65 rose from 18.8 years in 2000 to 2002 to 20.9 years recently. Because these figures are averages, many Canadians will live longer, so plan your savings to last into your 90s.*
2. Turn savings into steady income. Saving is only half the job. Plan how your savings, government benefits and any workplace pension can provide a reliable income for life.
3. Account for inflation. Even modest inflation reduces what your money can buy over a long retirement. Build rising costs into your plan.
4. Protect against the unexpected. Illness, disability or the loss of a partner can change everything. Review your insurance coverage regularly and be wary of anyone who pressures you to act fast or promises abnormally low or high guaranteed rates.
5. Check in on your plan every year. Your circumstances will change over time, so review your plan annually to make sure it still meets your needs.

This information is general and should not be considered financial advice. Find free financial tips and resources.

The CIA also released a statement on retirement decumulation strategies for Canadians. It focuses on the decisions retirees must revisit over time, including spending, longevity, investment risk, health needs and income sources.

*Source: Statistics Canada, Table 13-10-0114-01, Life expectancy and other elements of the complete life table, three-year estimates, Canada, all provinces except Prince Edward Island. Exact figures: 18.81 and 20.85 years.