You feel like you’re financially organized. You’ve assessed your current financial situation and determined your short-, medium- and long-term goals. You’ve even protected yourself against a potential catastrophic accident like a long-term injury or accidental death. It feels good to be on track, and you know you’ve got all your bases covered… or have you?
In the last decade or so, society has changed in so many ways, and the way we need to think about retirement is one of them. We’re all living longer—and hopefully healthier!—lives thanks to our improved knowledge of nutrition and exercise and, of course, great advances in modern medicine. Most of us know that we’re living longer. And as we plan for the future, many of us will take into account the possibility or even likelihood that we’ll live into our 80s or 90s.
So, what’s the potential pitfall? It’s something many of us haven’t considered: Our parents are likely to live longer as well. This is great news, of course, but what if your parents live into their 80s and 90s and haven’t financially prepared for this reality? After all, it seemed like a remote possibility when they were much younger. CPP and OAS can only go so far in supplementing their lifestyles. If your parents haven’t put aside enough for their retirement years, you and your siblings could be forced to financially subsidize them for years to come. Odds are your financial plan didn’t consider that!
This issue has really hit our radar over the past few years, which is why we ask the clients in our wealth management practice how financially secure their parents are likely to be in retirement. When we ask this question, it’s one of the few times our clients look at us and say, “To be honest, I have no clue… We’ve never really discussed money with our parents before.” It’s a touchy conversation to have, and many people just aren’t comfortable discussing it with their parents. If that’s the case, nobody’s going to force you to have that conversation. Still, it’s important for you to at least have a sense of how your parents are doing financially when you consider planning your own financial future -- and plan for the possibility that you may need to help them out at some point.