The Empty Nest Stage: Financial Planning for the Retired Woman

30 May The Empty Nest Stage: Financial Planning for the Retired Woman

According to Statistics Canada, women live nearly five years longer than men do on average.[1] They also have higher rates of disability and they may have earned less than men during their working years.

They will also have different questions to answer and challenges to address when planning for their retirement years. They may have long term care needs, which can be expensive. They may have a smaller savings due to a gap in their working lives to raise children or support a spouse’s career.

At the same time, many women are choosing to work longer. They may be so energetic that they don’t seem very “senior.” If you’re approaching retirement age and considering your options, keep these topics in mind:

• Canada Pension Plan (CPP). Although you can begin to collect on CPP at the age of 60, it may not be advantageous to do so. A woman who begins to collect CPP at 65 receives 36% higher payments, and one who waits until 70 receives payments that are 42% higher. If you don’t need to collect CPP, it is worth postponing, especially if you expect to live a long, healthy life.
• Child-rearing dropout provision: Service Canada doesn’t know if you stayed home to raise children for a period of time, so you must notify them. You can do so by completing the Child Rearing Dropout Provision form to provide appropriate information. This can help you to maximize the amount of CPP you are eligible for.
• Reducing net income: Seniors are entitled to an array of benefits, but eligibility is determined by your net income for tax purposes. It’s worthwhile considering various ways to reduce your net income, including minimizing withdrawals from registered assets such as RRSPs. Successfully reducing your net income can lead to receiving more government support, such as a larger Old Age Security benefit.
• Estate planning: As your financial situation changes from saving for retirement to living off that retirement package, it’s important to review your entire estate plan. Update your will and any beneficiary designations, including designating beneficiaries for your RRIFs. Depending on your circumstances, it may be a good idea to plan a pre-paid funeral as well.
• Disability insurance: If you have a disability, work with an advisor to ensure you are taking advantage of the tax credits and other relevant benefits. It’s also a good idea to ensure you have proper powers of attorney for finances and care.
• Long-term care insurance: Healthcare is expensive, and the provincial plans may not cover everything. It’s a good idea to consider long-term care insurance to cover appropriate care in a nursing home or in your own home, depending on your preference. The policy even covers housecleaning, cooking and other tasks you may not be able to perform yourself in your home.
• Critical illness insurance: Heart disease and cancer are the leading causes of death for senior women.[2] There’s a good chance you’ll face a serious illness during your retirement years, and critical illness insurance is one way to soften the blow. The lump sum payment can be spent in a variety of ways, providing appropriate medical care or even simplifying home renovations if your mobility is limited.

To learn more about planning your estate, contact us.

[1] https://www150.statcan.gc.ca/n1/pub/75-006-x/2016001/article/14464-eng.htm

[2] https://www150.statcan.gc.ca/n1/pub/89-503-x/2010001/article/11441-eng.htm

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.