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You are going to live longer, but just how long is anybody’s guess

| The Financial Post| 25/10/13 | Last Updated: 26/10/13 11:54 AM ET

How We Die Now: “Death renders all equal,” wrote Claudian. How each one of us relates to death, however, is individual, and always changing — as we mature; as we contemplate life, and death, around us; and as society changes. In this special series in the National Post, we present stories and columns looking at the different ways we see, and prepare for, the Great Equalizer. To read the complete series, click here.

One prominent member at my golf club has always been a heavy drinker and a chain smoker. He turned 80 recently which prompted him to muse out loud that if he had known he was going to live so long, he would have taken better care of himself.

Based on new mortality tables published by the Canadian Institute of Actuaries, it turns out we should all heed his advice. The tables confirm what we already know, that Canadians are living longer. More noteworthy is the fresh confirmation that mortality rates have been declining even faster than we had previously projected.

For instance, a woman who just turned 60 can expect to live until about 89. Lifespan statistics can be a little misleading, however, because they give the perception we will live until a fixed age and then die. In fact, the vast majority of us will die earlier or later and we don’t know which it will be.

It is the prospect of living longer that is of most interest. For every 10 women who are now 60, five of them will live until 90. In the case of 60-year-old men, about four in 10 will live until 90. The chances are even better if you have good genes, a healthy lifestyle and a little luck on your side. And why stop at 90? The new tables also indicate that about one in four women and one in six men will live until 95.

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You probably will not live to 100 but even that milestone will become more common; the country has 6,000 centenarians today, a number which is expected to triple within 20 years.

The message to take from this is that our time horizon is getting longer so we need to rethink our strategy for dealing with it. For starters, stop thinking that once you hit 60, you are going to be around just another 15 or 20 years. It can easily be 30 or more years so here are a number of action steps to consider:

  • Take care of yourself. If you are going to live all those extra years, you want them to be active ones. The older you get, the more you’ll have to work at it: exercise regularly, keep a journal, learn bridge, read books that make you think, take a course.
  • Work longer. Retirement was never meant to be a 30-year vacation. If you have the opportunity, consider a part-time job into your 70s. You will find work is more enjoyable when it’s part-time instead of full-time and it will keep you younger. And besides, the extra money will come in handy if you are lucky enough to survive in good health until 90 or later.
  • Look into annuities. Annuities are a better deal than most of us realize (especially if interest rates rise) and they eliminate the worry about outliving one’s assets. You may not want to lock up all your retirement savings in an annuity but half might make sense.
  • Take investment risks. A longer investment horizon means you can’t afford to be super-safe with your RRSP and RRIF investments. You might think you are avoiding investment losses by investing in GICs that yield just 2%, but in fact you are guaranteeing losses by doing so, at least in real terms.
  • Postpone CPP and OAS. You have the option to defer the start date of your CPP and OAS pensions until as late as age 70 in which case they will pay 42% and 36% more, respectively, than starting these pensions at 65. To make this strategy work, you need to have significant retirement savings that you can use to replace the forgone CPP and OAS income until 70.