Many countries have been pushing the age of retirement above the conservative number of 65. The reasoning behind this move is simple. Thanks to increased life expectancy and health standards, the number of years a retiree would depend upon the government, have increased.
Also, the disparity between the birth and death ratio in most countries means that the workforce is shrinking. It means that with every passing year, the burden of taxes will be spread among fewer and fewer people.
You can already see this trend in the increasing CPP premiums, which will keep increasing until 2026. The simplest way to balance this out would have been to increase the retirement age from 65 to 67 in the same duration.
Change in retirement age
There isn’t a national plan to change the retirement age anytime soon, but a lot of experts and entities have started voicing that the obsolete age of retirement should be changed.
It would have been better if it was done in 2012, when this idea was initially introduced. Even now, if the changes are made, it would, over time, relieve some burden off the taxpayers.
When it comes to personal choice, many Canadians are working past the age of 65. According to an estimate, every two out of five Canadians between the ages of 65 and 69 are working.
Working past 65 can also be connected to CPP, which more and more Canadians are now delaying till the age of 70. This way, they get the most out of the CPP pension.
The improvement in technology hasn’t just improved the health and life expectancy; it has also allowed flexible and less physical working conditions. Thus, people above the age of 65 can continue working without straining themselves too much.
Savings to match the life expectancy
An increase in life expectancy means that that you will have to live on your savings for many more years. While CPP might be a dependable source of income, it shouldn’t be the only source of income for a retiree.
Sufficient savings and right financial decisions will get you a sizable enough nest egg by the time you retire.
A straightforward way to grow enough wealth for a cozy retirement and extended retirement years is to invest in great stocks, like BCE (TSX:BCE)(NYSE:BCE).
The telecom company is a longstanding Dividend Aristocrat, with a decade of consecutively increasing payouts under its belt. It also operates in a relative oligopoly and is well poised for the future of communications.
The company is offering a decent yield of 5.3%. If the company keeps up with its trend of increasing payouts, you can expect better returns with each passing year. The company’s market value has also seen decent growth of about 107% in the past 10 years.
Foolish takeaway
People should never be afraid to live long enough to outgrow their savings or financial means, albeit this is a realistic fear. The best way to get rid of it is to not depend solely on pensions, and have enough saved up to live a comfortable and well-funded retirement life.
And the optimal way to grow your savings to that point is through smart investments.
