Will I Outlive my Money?

The topic of this month’s webinar was retirement planning, particularly the shift into retirement living and finance management. Most people ask the question "will I outlive my money?" as they get older so Aspira wants to help you find the answer while offering tips on how to avoid that scenario.

Our expert presenter
The webinar was presented by Michael Malika, the founder of MGM Financial, an independent financial advisory firm specializing in holistic financial planning focusing on wealth management strategies for all. Having spent over two decades simplifying financial planning, Michael brings valuable expertise to the table. To watch the webinar, please click here.

An exciting/daunting transition
Transitioning into retirement can be exhilarating but also daunting. The major part of this process involves understanding the financial dynamics of moving to a retirement community and ensuring your savings can maintain your lifestyle. The host of this month’s webinar, Leanne Alport, who is a senior sales support specialist at Aspira Retirement Living, emphasized the team's commitment to assisting seniors through this significant transition.

Allport mentioned that Aspira offers a wide range of suites and services, designed to cater to the diverse needs of its residents. Costs range from per month, from about $3,000-$5000 per month depending on the chosen community and suite features. Additional occupants may increase the monthly cost. Suite costs include amenities such as housekeeping, daily meals, emergency response services, and entertainment facilities, among others.

A common concern
One thing many people worry about when considering retirement living is the fear of outliving their financial resources. To address these worries, Michael presents several potential retirement income sources. These include the Canada Pension Plan (CPP), Old Age Security (OAS), Retirement Income Fund (RIF), company pensions, rental properties, and even selling your primary residence.

Making your money last
According to Michael, the idea of selling their home to finance retirement living is a route many individuals consider. For example, selling a property and investing the net proceeds of $500,000 at a 5% return rate could yield a steady income stream. If you need an annual income of $60,000 for retirement living, your invested funds could last for about nine years.

Moving into a retirement community is a significant decision. Understanding the financial factors associated with this decision can ensure a smoother transition. Malika advised reaching out to professional financial advisors and retirement living specialists for guidance.

Balancing retirement finances to make your money last becomes more significant as individuals reach their 70s and 80s. But with the right planning and investment, you can ensure a sustainable income to afford a comfortable lifestyle.

Smart investments
Consider this example: If you've saved a million dollars for retirement and your investments yield a 5% return, that alone could provide about $50,000 annually. If you need an annual income of $60,000, you would only need to withdraw a small amount from your principal, preserving your financial longevity. If you sell a property and gain a million dollars, smart investment of that amount could provide income for about 20 years.

Real-life examples
Two real-life cases help illustrate this. The first case involves a couple in their late 80s. They each receive CPP and OAS totaling $3200 per month. They own a mortgage-free house worth about $1.8 million but have no other savings. After selling their house and investing the proceeds, they were able to move into a retirement community. The returns from their investment were sufficient to cover their living expenses.

The second case involves a widowed woman in her late 70s. Her income sources include CPP, OAS, her late spouse's pension, and some RRIF income, totaling just under $6000 a month. She owned a house in Vancouver worth around $1.5 million. After selling her house and distributing some of the proceeds to her son, grandchildren, and charities, she moved into a retirement community. Her existing income sources covered her retirement living costs.

Retirement living can be affordable with a monthly cost comparison tool, which breaks down all potential expenses, from trash removal to insurance. The aim is to inform future retirees about the many options available to secure a financially stable retirement.

Plan early and reap the rewards
Overall, Malika endorsed early planning for retirement. According to him understanding your financial status, considering various investment options, and laying out a strategic financial plan are crucial steps towards ensuring a comfortable and secure retirement.

Remember, knowledge is power. The more informed you are, the better decisions you can make about your future. Retirement should be a period of enjoyment and relaxation, free from financial stress. With careful planning, it indeed can be. If you would like to watch the webinar on this subject please click here.

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