Thursday, January 21, 2021

Financial Wellness Puts Healthy Aging Within Reach Through Savvy Money Strategies

Boomers are a generation of rule breakers, but there’s one front where Canadian Boomers toe the line: financial health.

Yes, Boomers have a well-earned reputation for consumer spending, but Canadians are by nature a little cautious: We’re not thought of as big risk takers and high fliers. This prudent approach to life, combined with an investment industry that tends to scare us into saving, means many Canadians amass healthy savings in their Boomer years. Rather than taking it to the grave, however, Boomers are gearing up for the next frontier in spending.

People like to think they are different from their parents, and when it comes to attitudes about money, Boomers really are. The previous generation grew up during the Great Depression or World War II: life-changing experiences that gave them a lingering sense of real hardship, prompting oversaving “just in case.” Boomers are reaping the rewards of this cautious approach. Having mimicked their parents’ good saving habits, they also own their position as a consumer powerhouse, ensuring their retirement years are going to be very different.

Boomers are investing in health, technologies, products, services and experiences designed to embrace and enhance the next phases of life. For instance, aging in place is a significant priority for most Boomers, and this will involve modifying homes to remove barriers and enhance safety. The key is understanding your larger financial picture.

Financial health opens the door to healthy aging.

Unlocking your options

While the investment industry likes to say “you can’t count on the Canada Pension Plan (CPP) and Old Age Security (OAS),” you can. In fact, a 65-year-old couple who spends their working life in Canada will likely see combined CPP and OAS of more than $40,000 a year, indexed to inflation.

Plus, if you’ve owned a house for 30 or 40 years, you have significant value tied up in real estate. And let’s be blunt: If you are in your 50s or 60s, chances are there’s an inheritance in the pipeline.

Combine decent savings, valuable real estate, government pensions and a possible inheritance, and that’s a solid financial foundation. I recognize that not everyone is in the same boat, and debt is an issue for some, but in my experience, most people are surprised (in a good way) at the big picture.

What does this mean? More options. Travel, adventure, nicer food, helping family or charity in a larger way, but also spending on your own health. I’m not saying blow it all at once, but plan with confidence.

It’s yours to spend

This reminds me of a conversation that I had with a couple soon after one of them had recovered from a tough bout with cancer. With experience came perspective, and they decided to move ahead with their dream trip – exploring their ancestral roots in England and Wales.

They asked me how they could make it happen. They own a house worth $400,000, no debt and about $45,000 in annual income from government pensions, as well as a small work pension.

I recommended a home equity line of credit for $100,000 and drawing $10,000 to pay for their trip, plus another $5,000 each year to give them breathing room. Even though they don’t want to sell their home now, when they ultimately do, they can easily pay off the line of credit.

Two months later they were on a plane, living their dream with money they had, but hadn’t thought they could spend.

Now it’s your turn. Evaluate your future finances, either on your own or with the help of a financial planner and identify opportunities to age powerfully. You’ve earned it.

Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. Email: ted@tridelta.ca

Originally published in Issue 01 of YouAreUNLTD Magazine.

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