Financing the golden age

When Doris turned 90, she enlisted the help of her nephew to move her from her house into a retirement residence and arrange for rent payments. As he set about the task, he was shocked to see that Doris had $200,000 in a chequing account and no interest earning investments.

For Karen, her father’s dementia required supervised care. She was stunned to discover he had investments with multiple institutions. Trying to consolidate her father’s finances and support his transition into care was exhausting.

“People tend to build financial plans to get to retirement,” says Joseph Torchia, a financial, investment and retirement planner with Bank of Montreal in Morris, Man. “But they often don’t plan for post-retirement.”

While most folks can’t wait to retire so they can travel or spend more time at the family cabin, they often don’t think beyond that imagined “all play and no work” life.

As more Canadians live beyond the 2015 statistical average of 82.14 years, financial needs change. The results are often similar to what happened to Doris, who neglected to manage her money to maintain a healthy income to support herself when she needed more care. Or, family members like Karen are suddenly scrambling to figure out financing solutions for a parent who can no longer make decisions.

“Financial security becomes a larger issue as we age,” says Derek Moran of Smarter Financial Planning in Kelowna, B.C.

He says it is important to manage finances at every age and, if the task becomes overwhelming, involve a younger family member or trusted friend.

“Seek the advice of a professional and revisit a financial plan annually, especially if there is a major life change, such as the death of a spouse, remarriage, or selling a house and moving.”

A professional should determine financial needs, explain fee structures, and work to get needs met.

Finding a financial adviser in a rural community might be challenging because there may be only one bank, but they often will work remotely. For example, Torchia travels to many smaller banks to meet with clients.

“A trust relationship is more intense with money, even more so than a trust relationship revolving around health,” says Tayona Johnas, a vice-president of strategic development and wealth management with Sunrise Credit Union in Brandon. “Go to the place where you do your financial transactions and ask to talk to someone about your money.”

Johnas adds that diversification doesn’t mean having money in many institutions. Instead, it is about having money working through several products to ensure financial stability.

“Simplify your life while you have the ability to do it,” advises Torchia. “Get good support from a banker, a lawyer and an accountant.”

The advisers recommend planning for senior care while your retirement dreams are coming true. When sitting on the dock, consider how you want your financial picture to look when you are 80 or 90 or more.

Mary, a retired teacher, thought she had planned well for her retirement but when she turned 90, she realized her investments were not keeping pace with inflation and costs were going up.

“I’ve lived too long,” she says.

Seniors should not outlive their savings. By planning for continued financial security before they need it, stress is reduced and it’s easier for family and friends to step in and take over, if necessary.

“Buy green bananas,” says Moran. “But simplify your life while you can and plan for all outcomes.”

Resources:

• Useful websites to help seniors plan for a long and financially secure future:
• www.seniors.gc.ca is a Canadian government website with information on financial planning and tips on developing a financial plan and why.
• www.fpsc.ca is the website for the Financial Planning Standards Council. This not-for-profit can put a senior in touch with a professional who specializes in elder planning.
• www.iafp.ca from the Institute of Advanced Financial Planners can also identify a registered financial planner to help a senior prepare for the future.