You Need to Plan

This winter my mother was hit with some pretty severe health problems which prompted us, and by us I really mean my two sisters mainly, into action in figuring out what to do. It was clear that my mother would not be able to return living in her home, as my father has his own dementia issues and would not be able to help. My mother had been acting as his primary caregiver and we knew that this would not be able to continue.

Luckily for us, though my parents aren't the best financial gurus in the world, they had a plan. My father was a chemistry teacher and retired with a very good pension. Through other government programs and old age security my parents did not have to worry about how they were going to pay for a long term care home. The money was there. That made finding them adequate lodgings easier and allowed let us not have the added worry of "how are we going to pay for this". My father was lucky having a pension. Not all of us in today's society are as lucky.

This got me to thinking about the need to prepare financially for the future and being prepared in your life.

Thinking about the future can be hard to do. When you are young, I am considering myself in that category at age 33, there are a lot of demands and pressures on your resources. You may want to establish a career, and that could mean not being paid as much as you might like. You might be starting a family or adding to it. You want to buy a house. You want to have fun, fulfill your dreams now and live in the moment. That is on top of regular financial demands of food, clothing, lodging and utilities. Your money has a lot of places to go, many of those immediate and not wasteful.

While we need to think of our needs now, it is imperative that we think of the future as well. Yes we all may have the plan and dream to buy a home, pay it off, and stay in it as long as possible. And that is a great plan, but as my parents example illustrates, that is not always possible or safe. My mom's decline was swift and unexpected. My dad with his dementia could not be left alone, at all. The plan of staying in their house as long as possible was just not a reality they could entertain.

So, while you are young and have the power of compounding on your side it is important that you add the future (and I mean like 50 years in the future) to your list of places where your money goes. Yes it might suck when you have kids who need piano lessons, or you want to go on a trip to Cuba. But trust me, your future self and those responsible for you in your future will thank you.

So what can you do to help be prepared in your life? Many things. 

If you are working contribute to your company plan. Many companies will deduct a certain percentage from your pay check and will match it up to a certain percentage. Free money, yes please. Often you are able to decide how the money you are setting aside is invested. So check it out, you really have nothing to lose.

If your company doesn't have a plan, or you are self employed or on contract or simply want to save more open an RRSP (or whatever your country's equivalent is). In Canada you are able to invest a maximum amount (found on your income tax information) into an RRSP. The money is tax deductible which means a bigger return for you and the money grows tax free. You don't pay tax until you take it out, and by then you will probably be in a lower tax bracket. You can also open a TFSA for saving as well.

Try to develop thriftiness now so you can save for later. It is hard when you are starting out. You want everything and want it now. By finding ways to get what you would like cheaper and saving the difference, learning to do with out, or being a bit more creative with what you already have will help. Also, if thriftiness is something you develop now when you are older hopefully you will still have those habits and will be able to make your retirement dollars stretch farther, which is always a bonus when you are on a fixed income.

Come up with plans for different scenarios. You might not have to do this right now if you are in your thirties but it is a good idea to run through and plan for different ways your life could go. What will happen if you have health problems? Who will be able to help you? Children? Friends? Where will I be able to go? Can I afford private care or will I have to go into government assisted care?

Keep abreast of government programs and services available. As much as we sometimes might complain about the government they do have a lot of great programs available for a host of initiatives. While these programs are great they are not always the best advertised. So do your homework, it will help you not only with yourself but your parents or others who might be in a similar situation. Because of my sister's awesome diligence and knowledge she was able to get some renovations done at my parents home that was paid for through a government program. We were able to access PSWs for my dad and there were probably other things that I don't even know about that she could have set up if needed. The government does have programs to help. Do the research now so that when you need them you already know how to access them and you won't be feeling the stress and the crunch.

Swallow pride and ask for help. When you get help receive it graciously. Part of growing up is exerting our independence and proving to ourselves and other that we can do it on our own. While that is great there are times when we need to ask for advice and help to do things. And that is fine. That is the whole reason why people acquire skills, it is for their benefit and the benefit of others. If needed ask questions of others how they prepared for retirement. Go to a financial advisor. Start a money group to get ideas of how to deal with money, budget and plan. Ask people to help you organize and be thrifty.

Be realistic and flexible. Sometimes when we plan things still won't go the way we hope or think. You need to be open. This could be with how much you want to save now, it could be once you you are older you may not get your first choice of residence. We have to be take bearings of where we are accept what can be done with the resources you have and make it work.

Be kind and helpful to your parents NOW. They have done a lot for you, they may be slowing down but be patient with them. Accept them for who they are now. They are not going to be the same as they were. Yes you may morn that, but just move on and accept them for the person they are now. The better you are able to understand their circumstances and limitations the more you will be able to understand your own golden years and what might be expected. Often when my dad repeats his questions or retells his stories, I look at my husband and say "this is what you have to look forward to". Be kind.

Do what you can now to be healthy and active. If you are planning an active lifestyle when you are retired, then you better be active now. You aren't going to miraculously be active in retirement if you are sedentary and eating horribly now. That just doesn't make sense. Your ageing body is going to change. There are illnesses that you can't avoid. Genetics play a role in things. But the better you are able to take care of your body now, the less complications and the more illnesses and pains you may be able to avoid in the future. It never hurts to take care of your body.

Looking towards the future can be hard, especially when your present may seem demanding. But doing these few things will help you have peace of mind later on. No one wants to be a burden on their family. Doing a few things now will allow independence, option and choice later on. Things may not work out how you want. You may not be able to stay in your home as long as you want. But if you are prepared and have a bit of a plan that won't be a scary thing. The resources will be there to make the transition as smooth as possible.