RBC Survey re Retirement

         

 

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Posted in Retirement by Banks-Banqes

April 06, 2010

Canadians\' retirement dreams are fading

Talbot Boggs

(Special) - Many Canadians are losing hope about fulfilling their retirement dreams.

A recent survey by RBC found that while 90 per cent of Canadians believe they will have enough income to cover the necessities of life in retirement, only one in four believes they will be able to fulfill their retirement dreams.

One reason is that many retired Canadians don\'t know how much they need, or will spend, in retirement.

The poll found that three-quarters of retired Canadians last year didn\'t know how much they spent in their first year of retirement, about the same number as in 2008. Those who did know how much they spent had lower costs in their first year of retirement - $35,000 compared to $51,000 in 2008. However, half of these respondents (52 per cent) said they spent more than expected, up from 46 per cent in 2008.

\"How much money you\'ll need in retirement depends on how you\'ll be spending your time,\" says Lee Anne Davies, head of Retirement Strategies at RBC. \"Many Canadians underestimate the amount they will need. Financial planning is more than just number crunching and your retirement is not a single phase of your life, but a series of stages. A personalized financial plan can look at options to make your nest egg last and help ensure your retirement needs and dreams are met.\"

When thinking about retirement, the study found that 48 per cent of Canadians who have not retired were most worried about having enough savings while only 29 per cent of retirees had this concern. About 40 per cent of both pre-retirees and retirees are concerned about maintaining their standard of living in retirement.

\"Whether retired or not, your life will be somewhat unpredictable at times and you need to be ready when life throws you a curve ball,\" says Davies. \"This is where having a plan can provide peace of mind - you\'ll know you\'ve considered the unexpected and you\'ve taken the steps to save for your retirement.\"

The portfolios of many retirees and other Canadians were devastated by the meltdown of global financial markets during the recent economic recession.

The question now is how long it will take for your investments to recover?

The Investor Education Fund has a useful calculator (http://www.getsmarteraboutmoney.ca/tools-and-calculators/back-on-track/default.aspx) to help investors determine how long it will take to recover investment losses and reach your original goals.

In graphic form it shows your original portfolio value before the downturn, the current market value, and the year in which your investments will recover and begin additional growth.

Many investors also may have liquidated holdings during the meltdown, parked their cash on the sidelines and missed out on the rebound over the last few months.

For example, investors who stayed invested in the Canadian equity market between January 1, 1990 and December 31, 2007, could have realized a 7.18 per cent annual compound return. But by missing just as few as 50 of the best trading days during that period, you could have eliminated all growth from your portfolio.

\"Human nature may drive investors to throw in the towel, but those who \'go long\' practice the best defence for their portfolios and retirement plans,\" says Gaeten Ruest, Director of Strategic Investment Planning at Investors Group. \"It\'s the time in the market that counts.\"

Ruest says even if you\'ve missed out on the rebound, it\'s always a good time to get back into the market and you shouldn\'t rule out changing your investment strategy if it makes sense.\"Investing doesn\'t have to be an all or nothing play,\" he says.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. (boggsyourmoneyrogers.com)

Copyright 2010 Talbot Boggs

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