Can you afford to retire early, given you may live to 100?

William Ubbens, 93, is already almost a quarter century into his retirement, and is hoping for plenty more years ahead, with his pockets full.

At the start of the new millennium, Ubbens and his wife decided to start a new phase of their life. “My wife said, ‘That’s it. I want you to sell the business.”

So he sold his 45-year-old insurance firm to officially enter the golden years with his wife.

Twenty-four years later and now a widower, Ubbens said he had managed to live comfortably, and still has enough money to last him until his 110th birthday. He credits his frugal lifestyle and hard work.

“I don’t waste money,” he said.

“People tell me, ‘Why don’t you buy a new car? You’ve got a 2010 Ford,”‘ Ubbens said. “But you know, the thing is, I’m old. So we have to get old together.”

Retirement has historically lasted about two decades, but for some Canadians it is now extending to twice that amount of time as more live well into their 90s and beyond. That’s making some rethink their investments, savings, expenses and when to retire as they look to stretch their retirement funds further than ever.

Statistics Canada released new projections this week suggesting that the number of Canadians aged over 85 could more than triple by 2073, while the number of centenarians could almost increase by 10 times, surpassing 106,000.

Retirement planning requires thinking about the time horizon, the amount of money needed and making sure that money lasts, said Kurt Rosentreter, a certified financial planner at Manulife Wealth. The primary question is when to retire.

“That’s a big factor in the planning,” he said. “If someone’s retiring at 55, they could literally live half a century with no new money coming in, in a society that’s making it more expensive every day to live.”

Surging inflation and interest rates derailed many people’s household budgets over the last few years, including retired adults on fixed incomes. A 2023 National Institute of Ageing study shows the top concern among Canadians aged 50 and over was inflation, followed by fear of running out of money in their old age.

Ninety-two-year-old Hank Kuntz didn’t expect to live so long, and rarely gave his retirement savings much thought.

“My dad, I think, was the oldest of his whole generation, and he was 87 and a half when he passed on,” he said. When Kuntz was in his 20s, he recalled thinking “Holy smokes! Sixty-five! I’ll be an old man by this time.”

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Kuntz said 65 was the “normal retirement age” when he stopped working as an accountant in 1997. He began enjoying post-work life and filled his time volunteering with a disability group. But he didn’t necessarily expect to be looking at his finances more than 25 years later.

“I never planned that hard,” he said of his retirement.

He has regular income flowing from the Canada Pension Plan, Old Age Security and registered retirement savings. He lives in a retirement home and if some of his savings run out, Kuntz said he could continue to live comfortably on other income from investments he began almost five decades ago.

Running out of money is far from a theoretical concern. At age 71, a person’s RRSP account matures and the cash must be withdrawn, put into an annuity or transferred to a Registered Retirement Income Fund, or RRIF, where withdrawal minimums increase with the account holder’s age.

At 95 years and older, the minimum annual withdrawal is 20 per cent of the fund’s assets.

“The formulas they (the Canada Revenue Agency) use are really outdated,” said Bonnie-Jeanne MacDonald, director of financial security research at National Institute on Ageing. “Because of the way the system’s built, they will have to be forced to run out of money from their RRSPs” by the time people turn 100.

She said policies need to change to adjust to the booming numbers of centenarians. A Statistics Canada population tracker estimates the number of centenarians has tripled in the last two decades. In 2003, there were 3,854 centenarians compared to 11,705 last year.

Wayne Westman, a chartered financial consultant, has worked with at least three generations of clients during his 60-year-long career. His oldest clients used to be in their mid-to-late 80s, not much older than Westman is now at 84. Today, he has a 103-year-old among his clientele and others on the cusp of achieving centenarian status.

Many of his clients in their 80s and 90s enjoy decent financial status because they have defined benefit pension plans from their employers or their spouse’s employer, which aren’t as prevalent for workers today. That, combined with federal pension plans and personal investments have kept many older people afloat, said Westman.

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Nonetheless, careful budgeting is necessary.

Hank Kuntz, 92, is photographed in his Brampton apartment on Tuesday, June 25, 2024. THE CANADIAN PRESS/Cole Burston

Angeline Charlebois, 105, has been living alone at her Levack, Ont. home for 29 years. She said income from her late husband’s pensions as well as Old Age Security pension have kept her going in her retirement years. This pays for the roof over her head, utilities and groceries.

“I have enough money for now,” Charlebois said. But if she were to move into a nursing home, she doesn’t think she’d have enough.

“A nursing home is going to be $3,000-$3,500 a month,” Charlebois said. “My chequebook isn’t that big to support that.”

But Charlebois said she feels like a millionaire as long as she’s healthy and can stay put in her home.

“I’m very fortunate that I have my health and my kokology,” she said, referring to the study of mind or spirit, and pointing to her head.

While watching Charlebois age, her daughter has been reimagining her own life as a possible future centenarian. Clairice Poirier, 70, retired three years ago from nursing. A widow for 25 years, she said she has been pretty good with finances but never factored possible longevity and inflation into her retirement planning.

“I never dreamt that the amount of the cost of living would soar the way it has,” she said. “Yet, your pensions don’t go up to reflect — some of them do, but not all of them.”

But Poirier isn’t worried about running out of money in her old age if she lives as long as her mother has, or if she needs residential care when she’s older.

“I’m not concerned about that because I’m the type of person that will cut back,” she said. “I will make it run the course.”

Rosentreter, the financial planner, said pensions combined with registered retirement savings, tax-free savings and even investments might not be enough to keep up with health-care costs and modern Canadian living.

He suggested establishing alternative incomes for old age, such as rental property.

Ubbens has been living in a retirement building in Brampton, Ont. for over a decade, and is well-settled there — financially and otherwise. But he’s not just relying on his registered retirement funds, federal pension and savings.

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His creative plan to keep money flowing into his late 90s and centenarian years was lending to family.

“I have given three of the grandchildren a mortgage on their house at a low interest,” Ubbens said. “They pay me monthly until the mortgage is paid off and I’ve been investing some of that money.”

He added: “I can probably live until I’m 108 or 110 years old. I don’t have to worry about my finances.”

Working beyond 65 can also keep the future secure, and feed pension and savings pools, Rosentreter said, depending on a person’s spending levels.

Even still, it can be hard to plan retirement, not knowing if it will last 20 or 40 years. Rosentreter said he has been advising his clients to use 100 years of age as a benchmark, even though average life expectancy in Canada is 79 for men and 84 for women, according to Statistics Canada.

“Most people go with that,” he said. “They know they’ll die before that but they get the logic of making sure they want to have enough money.”

MacDonald at the National Institute on Ageing said deciding how much to save for retirement should be based on probabilities of living past certain ages, and asking “what if?”

“Start thinking through, ‘If I know there’s a 50 per cent probability I’m going to live over 90, what would happen? If I was a widow, what would happen?” she said.

“There’s a very good chance you’re going to live a long time,” MacDonald said. “For most Canadians, that’s true.”

Tapping into CPP or the Quebec equivalent, the Quebec Pension Plan, in later years of retirement can help super-agers stretch their money, since the monthly benefit climbs with the age the person begins collecting the money.

“Although most people can afford to wait,” MacDonald said, “an overwhelming majority (nine in 10) choose to take their CPP/QPP benefits by age 65, reducing the lifetime income security they say they want and will most likely need.”

She suggested delaying those benefits after retirement for as long as possible and bridging the gap with savings such as RRSP.

“By doing that, I’m going to increase this lifetime pension, which protects me from inflation, which protects me from running out of money, which protects me from investment risk.”

This report by The Canadian Press was first published June 27, 2024.

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