Could Your Future Be In Jeopardy? Learn The Facts About Retirement Planning
Planning For The Future In 2013, Investor Education Fund surveyed 1,500 homeowners over the age of 50 in order to gain further insight into the financial realities of those nearing retirement in Canada.
The results point to a lack of adequate retirement planning, and they border on shocking: nearly half of those surveyed believe they will run out of their retirement savings within the first 10 years of retirement.
Other findings include:
- Nearly one-quarter (24 percent) of Canadian households have no idea how much they will need to draw from their savings/investments every year after retirement, including their company pensions.
- One-third (33 percent) of Canadian households do not believe they have enough saved for retirement, and one-quarter are not certain.
- Half (48 percent) of the respondents have never thought about selling their home as a way to generate income to live on in retirement.
- One-quarter (24 percent) of homeowners expect to have debt on their principal residence after they retire, with a median debt of $71,000.
While individual situations vary, it’s fair to assess that many Canadians, seniors included, have not properly projected how much they’ll need in retirement and therefore haven’t saved or invested enough to fill the gap that company pensions (if you have one) and government benefits — like the Canada Pension Plan, Old Age Security, and the Guaranteed Income Supplement — can’t cover.
Start planning for retirement early
Canadians would do well to start retirement planning as early as possible. You can start by assessing your current situation and thinking about when you’d like to retire and what that retirement might look like. There are free online tools and calculators that can help to illustrate where you are and how much you’d need to get to where you want to be.
Once you have those rough numbers in mind, it’s time to form a plan and put your money to work. This might mean finding the right advisor who can provide you with investment options that have your risk tolerance, timeline, and goals in mind. Taking advantage of options like RRSPs and TFSAs can provide you with tax incentives (with RRSPs, your contributions are tax-deductible and you pay tax on withdrawals while TFSAs offer you tax-free returns on your investments).
Beyond investing, ensuring that you’re living within your means and not running up debts is also critical to entering retirement in a good place.Those who are already retired and are feeling the pinch of expenses outweighing income likely have some tough decisions to make. Some options might include selling and downsizing property, renting out some of your home, or even returning to the workforce in some capacity. Speaking with a qualified financial advisor can also help in identifying options. It’s important to take an active approach and get the help that you need to address the issues with a solid financial plan.