March 14, 2022

I also cover this in a YouTube video. Click here to watch!

What is the #1 risk to you enjoying a comfortable retirement? 

In this blog, I’ll be sharing with you what people are most worried about as they plan for retirement and how you can take steps now to avoid this issue.

First, let me ask you a question: what do you think is the #1 issue facing Canadians as they enter into retirement?

Is it the return rate on their investments? If they have decided to downsize their home, do you think they are worried about whether or not they will get the maximum value when they sell?

The #1 issue – which becomes the #1 question I am asked to answer for clients when we develop their written retirement plan – remains: will I run out of money in retirement?

There are so many variables to consider when answering this question. Here’s what we can do:

  1. We can gather all of your documents and review your current risk management strategy (such as Disability and Critical Illness Insurance); 

  2. We can have you calculate your monthly lifestyle expenses as you enter into retirement; and

  3. We can extrapolate these expenses against the liquid investments that you currently have to determine if there is a gap – to which we could develop a plan to fill that gap before you retire.

But there is still one variable that we cannot control for lack of a magical crystal ball…

What happens if you are retired, and five years into retirement you have a life event that now requires $10K or $15K a month in health care costs to take care of you… Where is the money coming from?

Sure, we can liquidate all of your assets, sell your home, and you could move into a nursing home. But what happens if you live for another 10 or 15 years?

We all saw what happened in 2020 with Covid-19: over 70% of the deaths in Canada were attributed to nursing and retirement homes. 

But what if you didn’t have to sell your house? What if you could stay in your home and have an additional steady stream of tax-free income to help pay for all of your health care needs?

I call it Living Care Insurance – the industry calls it Long Term Care Insurance, or LTC for short.

If you cannot perform two out of the six daily activities of living, you automatically start to receive a tax-free benefit each week for the rest of your life. Best of all, you do not need to move out of your house, you can stay in your home and have the health care services come to you.

When designing a plan like this, you can include other features such as Cost of Living to offset any inflationary factors. You can look at whether or not you want to make only premium payments for the next 25 years – which covers you for life – or if you’d prefer to take a more cost-effective approach, you could continue to pay premiums each year until you tap into the Long-Term Care coverage.

Now, from an underwriting perspective, LTC is one of the toughest insurance policies to qualify for… But if you do qualify for the coverage, and you cannot perform at least two of the six daily activities of living, then tax-free money is available to you to pay for your health care costs. Up to $2,000/week or $104,000/year – coverage for the rest of your life. 

It is estimated that over the next 25 years Canadians will be facing $1.2 trillion in healthcare costs, with only 50% of this being funded by the government… So we need to act now and we need to build a financial and retirement plan that is 100% bulletproof.

If you’d like to learn more about how you can implement an LTC plan, contact me at the coordinates below to apply to become my client. Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.

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By John Moakler, BMath, CFP, CLU

President and Senior Executive Financial Planner

Moakler Wealth Management

1 416 840 8544