Retirement Plans Must be Adjusted at Age 65

Have you discussed the nine key issues that require renewed consideration in retirement planning with boomers?  To begin, testing a financial plan against longevity is very important. For instance, did you know that a 65 year old male and female have a 50% probability of reaching age 89 (male), 91 (female) and 94 (either the male or the female)? There is also a 10% probability that either the male or the female lives to age 101. A female couple could have a greater likelihood of living even longer. 

In making retirement plans for couples it is also very important to test a long lifespan for one individual and an early death for the other individual, as the loss of income splitting and pension benefits can affect income, tax efficiency and wealth preservation.

The nine key issues that require consideration in planning for retirement with the Boomer Generation in the current economic environment include: 

1. A longer work life:  that means more employment and self-employment earnings in retirement, which requires new planning for RRSPs, TFSAs, CPP and OAS benefits.
2. Real Estate:  More wealth and/or more debt, especially for those with one or more residences.
3. Double Incomes: The pension accumulations of two people which can be subject to income splitting; an opportunity not available in previous generations.
4. Tax free Accumulations: Home equity, TFSAs, insurance for life and health bring new wealth planning opportunities.
5. Retirement Readiness: The Boomer male or female may be ready to retire, but the financial needs of others in the family may prohibit them from doing so. This may ring even truer in the Millennial generation, many of whom have pushed their childbearing years into their thirties.
6. More Minis: Grandparents may have younger grandchildren than in previous generations, as Millennials have their children later; these new families may require continued assistance from grandparents especially for housing and education planning of their children.
7.   To the Boomers and from the Boomers; capital pools need responsible investing at a time when financial literacy regarding new inflationary trends, market volatility and tax change is significantly lacking.
8. Potential Conflict:  Family complexities including blended families and family members that are spread afar in a mobile, global economy make planning with multiple stakeholders difficult.
9. Higher Taxation:Boomers and their families face unprecedented high-income tax brackets and rates on income and capital in the absence of income averaging and income splitting.

Specialists in tax efficient retirement planning must take all of these factors into account when developing strategies for income as well as the ongoing management of capital assets in retirement, especially in the current environment.

Advisors who want to add value during the summer months will open new conversations with this checklist of issues in mind, to take retirement income planning to a new level of precision.

Excerpted from the Professional Certificate Course: Tax Efficient Retirement Income Planning. Check it out today as you dive into your summer studies!