We always seem to hear statistics about how Canadians aren't saving enough for retirement. Although there’s no magic number for everyone, the message is clear: most of us should be putting away more money.

With less than a quarter (24%) of Canadians contributing to their RRSPs in 2012, according to Statistics Canada, the advice seems to be falling on deaf ears. Retirement may seem like a long ways away, but it will be here before you know it. Many people who haven’t saved enough for retirement say they’ll just keep working longer. But what if you don’t have that choice?

Seven-in-10 Canadians retire sooner than expected

A recent study from Sun Life Financial reveals some startling findings.

A majority of retirees (69%) didn’t stop working on the date they planned. Of those who had to take unplanned retirement, health was  the number one reason: 41% decided to retire early due to personal health.

Are you not convinced a major health scare can happen to you? Nearly half of Canadians (45%) said they’ve experienced a health event, with nearly almost a quarter (23%) impacted by a mental health issue. With health the No. 1 concern for many Canadians, you’d think we’d be well-prepared, but unfortunately, that doesn’t appear to be the case. Only 22% of Canadians have put aside money for health care expenses in retirement. This is especially alarming since a lot of your health and dental benefits end when you retire.

Not surprisingly, higher-than-expected health care expenses and financial difficulties seem to go hand in hand. Of those who’ve experienced a significant health event, just over four-in-10 have experienced financial hardship, while a quarter (25%) have reduced or depleted their savings as a result.

Why your group insurance may not be enough

If you’re laid off from your job, your first concern most likely is how are you going to pay the bills.

Life insurance is probably the last thing on your mind, but it shouldn’t be. You wouldn’t own a home without home insurance and you wouldn’t drive a car without auto insurance, so why do so many people leave themselves vulnerable when it comes to life insurance?

What many people forget is when you’re laid off from work, your group life insurance policy ends. Forget the fact that you may have been uninsured to begin with, if you don’t have an individual life insurance, now you don’t have any life insurance at all.

If you’re the breadwinner of your family and you were to suddenly pass away, you could leave your loved ones grief stricken and in financial ruins. If only you had an individual life insurance policy, you wouldn’t have to worry about this happening to you.

“The question is, what do you want to happen if you die too soon?,” says Brian Poncelet, an independent certified financial planner (CFP) and owner of RightInsurance.ca. “ Do you want to downsize your house, take out loans to educate your kids, or  sell your RRSPs, TFSAs  and investments?”

Affording additional insurance

I know what you’re thinking: you probably spend enough money on insurance already. The good news is you might not have to spend that much more money for additional coverage.

By raising your deductible on your home or auto insurance, your existing premiums will drop and you can use that extra money towards individual life insurance.

“If you could get more protection for free would you get it,” says Poncelet.

When it comes to life insurance policies, not all types are created equal. The decision between term and permanent life insurance isn’t always easy.

“Term is like renting. There’s nothing wrong with that, but most people want to own their own house versus giving money to a landlord,” says Poncelet.

Sean Cooper

Sean Cooper is the author of the new book, Burn Your Mortgage. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Financial Journalist, Speaker and Money Coach, his articles and blogs have been featured in publications such as The Toronto Star, Globe and Mail, Financial Post, Tangerine: Forward Thinking blog and TheDot. You can follow him on Twitter @SeanCooperWrite.

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