When thinking about saving and investing, most people think about saving for their future retirement. But the need to save and invest doesn't end there. Throughout retirement, you'll continue to need financial strategies to make sure your money lasts. This is especially true for women, who have longer life expectancies than men.
Here are some factors to consider in building a strategy for income in retirement:
How long might your retirement last?
When estimating your retirement income needs, it's important to assume you'll live a long time. According to Statistics Canada, Canadian women can expect to live about 4.5 years longer than men and therefore must finance a longer period of retirement. Canadian women have higher disability rates than men and may incur costly long-term care needs as they age. And their cumulative lifetime savings may be lower than men’s given shorter working lives and lower earnings.1 Develop a realistic estimate of how much money you'll need each year in retirement by looking at your current spending. Think about expenses that may increase with age. After you've analyzed your potential expenses, take a look at your potential sources of income, such as your investments and retirement savings.
Any expenses above and beyond the income provided by government and employer group plans will need to come from your personal savings and investments.
How much do you expect to receive from Old Age Security and Canada Pension Plan?
CPP is based on how long you’ve worked, how much you’ve earned and when you start taking benefits. On average, women's benefits tend to be lower than men's because women may spend fewer years in the workforce.2
The age at which you start taking benefits also has a big impact on your retirement income over the long term. You can start receiving CPP benefits as early as age 60, at a reduced rate, with full benefits at the retirement age of 65 and maximum benefits at the age of 70. Entitlement to OAS begins at age 65 and can be deferred until age 70 for increased benefits.
Read here for more information about the details and eligibility requirements for Old Age Security and the Canada Pension Plan.
How will you address health care and medical expenses?
Longer life spans mean women tend to spend more on health care over the long term. And many women may shoulder these costs alone due to divorce or widowhood. Without a spouse to serve as a caregiver, a woman may risk spending more on outside care over her lifetime.
Health care expenses can dramatically affect your quality of life in retirement, so it’s important to plan for them in your retirement strategy. You also need to consider your family's health care needs, as those costs can impact your retirement savings, too.
How we can help
At Edward Jones, we understand the special circumstances that are unique to women in general – and to you in particular. Ask your Edward Jones financial advisor for more information about retirement income strategies that take your circumstances into consideration.
1 Statistics Canada: Insights on Canadian Society Gender differences in the financial knowledge of Canadians, 2016
2 Government of Canada: Old Age Security Overview, 2019