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Pattie Lovett-Reid

Chief Financial Commentator, CTV


The fact is we will all retire one day, and typically, our financial discussions will touch on retirement planning at some point.  

Retirement planning is serious business and could represent a third of our lives.

The challenge is that many focus on the unknowns such return on investments, inflation, health – and that leads to the big one longevity risk. What if you live too darn long? An extended lifespan will have a knock-on effect. You investments have to last longer so you don’t run the risk of outliving your money, there is a greater the chance inflation can creep higher and erode your purchasing power, and health deterioration can’t be underestimated.

Healthier lifestyles and advancement in medicine is leading to longer, more productive lifestyles. Evidence suggests you really want to err on the side of caution when estimating your longevity. Bet on living longer than you think you will.

Here's why.

According to Statistics Canada, the average life expectancy at birth has been on the rise in the country. Over the last 30 years, it has risen annually by an average of 2.8 months for men and 1.7 months for women, according to the data, with the expected lifespan being 79.8 years for men and 83.9 years for women from 2013 to 2015.

Add to this, the longer you live, the odds shift to a longer life. 

A 65-year-old male’s life expectancy increases by 19 years and a woman’s by 21 years, according to the United States Social Security Administration. And things kick into high gear when you take a couple who are 65. The odds are one of you stand a 50 per cent chance of living another 27 years.  

You might argue the numbers are simply averages and your situation is different – and it may well be. But the reality is most of us fall around the average mark.

To assess your longevity risk, I offer these three considerations around age:

1.Your biological age. No two 50-year-olds are the same given their biological make up, health, and even family history.

2. Your chronological age. Your chronological age is just a number, but a good starting point when planning for retirement.

3. Your financial age. Here you want to be so much old than your actual age and that can only happen if you start to save early and contribute often.

Don’t sabotage your own retirement – you may live longer than you think.