TORONTO, Oct. 29, 2018 /CNW/ - BMO Wealth Management today released a report that shares insights on the social and financial consequences of an increase in life expectancy and low fertility rates in Canada. According to a survey of Canadians aged 55 and over, more than half report that living longer comes with increasing concerns on health and caring for the aging population.
The Aging Economy: Improving with Age draws insight from a demographic that has tremendous influence on the Canadian economy, with the number of seniors increasing at a faster rate than the number of children born. The report reveals that living longer has not changed the number of years spent in retirement because Canadians are extending their working years. The report also explores the challenges and opinions of those in the aging economy on living beyond the average life expectancy.
"In order to have the long and fulfilling retirement that most Canadians want, effective financial decisions need to be made about savings strategies, retirement and estate planning goals," said Chris Buttigieg, Director, Wealth Institute, BMO Wealth Management. "BMO's financial professionals can help Canadians navigate the changing terrain of tax rules and the economy, and come out on top."
Key survey findings show:
- 51 per cent of respondents are concerned about the health problems and costs that come with living longer; 40 per cent are worried about becoming a burden on their families and 47 per cent are afraid of running out of money
- Canadians are staying in the workforce longer to supplement their retirement income, as previously explored in the BMO Wealth Institute report The Gig Economy: Achieving financial wellness with confidence
- 59 per cent of respondents said they have differing opinions from their partners about their individual and shared financial goals
- 33 per cent said they want to help their children financially in their lifetime even if they live beyond average life expectancy
- 25 per cent were concerned about maximizing their retirement income, followed by 22% who expressed concerns about outliving their savings and investments
BMO offers the following financial tips to help Canadians adapt in the aging economy:
Talk to your spouse or partner: It's easier to accomplish life goals when both partners are aware of each other's differences in opinions or objectives. Compromises and planning can help both partners achieve their financial goals.
Help your children: Providing financial support to an adult child or grandchild is a decision that should be considered within a larger context that includes both retirement and estate planning considerations, ideally within a comprehensive wealth plan. It's important to be aware of the amount you can part with - without affecting your financial goals.
Prepare for healthcare costs: Healthcare costs can impact the ability to achieve retirement goals, even though many medical costs are covered by provincial programs. The cost of long-term care can have a detrimental financial impact on retirement and estate plans. A financial plan could build in contingencies for the additional costs.
Reduce taxes: Taxes are an important consideration in both retirement planning and estate planning. One of the most effective ways to reduce the overall family tax bill is pension income-splitting. Couples can take advantage of their partner's lower marginal tax rate when one partner's retirement income is much higher than the others.
Give if you can: Charitable giving is important to many Canadians and comes with significant tax benefits to be realized by charitable giving at the top marginal tax rates.
Make a will: It is important to work with an experienced legal professional to prepare wills and Powers of Attorney that clearly explain estate plans and distribution goals.
To view a copy of the full report, which includes additional survey findings and financial tips, please visit: https://www.bmo.com/main/wealth-management/wealth-insights#wealth-reports.
To work with a BMO professional to achieve financial wellness visit https://www.bmo.com/main/personal/financial-planning or a BMO Bank of Montreal branch near you.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $765 billion as of July 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group