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Modern Day Thinking for the Senior Year

Senior planning

When children become young adults their parents are often full of advice for them to be successful in their future.   They even try to educate them on planning for their senior years.   The problem is what worked for the parents in their day just might not be the way to go for the young adults for their future.   When it comes to saving for retirement the rules may be changing.

It used to be that people were encouraged to save enough income for their retirement years based on 70% of what they earned while working.   While that sounds great it was difficult for most to make it a reality.   Years back people retired earlier in life usually around the age of 65.   In many cases the life span for seniors was shorter then than it is now.   Now the life expectancy is longer and a lot of people don’t retire at the age of 65.

If the young people of today were to depend on the 70% rule then it would mean they would need to save this amount from their pay each year.  Not many families can afford to live on 30% of their earnings while they sock away the 70% for the golden years.  There is no logic to this.   If you need 70% in your retirement years how in the world would you not need this during your working years?

There is no doubt that the young families of today are going to have to be far more innovative at their planning for their senior years.   They have to know what retirement plans they are investing in and what this is going to provide them with in their senior years.   By knowing this it will help them to plan for what additional savings they are going to need.   They also have to look into the future to determine what kind of senior lifestyle they are going to want.  Are they going to be happy with just the basics and being able to enjoy some entertainment on occasion?  Or do they have big plans to take a lot of vacations and travel the world without having to penny pinch?

While nobody can read what the future holds in store for them, unfortunately they have to give some real long term thoughts as to what financial stability they are going to need to rely on.

 

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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