Most boomers not saving enough for retirement

According to a study sponsored by the Canadian Institute of Actuaries, only one in three Canadians expecting to retire in 2030 is saving at levels adequate to meet basic household expenses in retirement. Many may find they have to increase their annual savings or continue working past age 65 to avoid financial hardship.

The study, titled "Planning For Retirement: Are Canadians Saving Enough?" was conducted in April 2007 by a research team based at the University of Waterloo's Department of Statistics and Actuarial Science. Seventy-two household profiles were used to determine whether Canadian baby boomers born in the early to mid-1960s are putting enough savings aside for successful retirement. The study focused on two income levels: households earning the Average Industrial Wage ($40,000 in 2005) and those earning twice that amount.

"The message for most Canadians in their early to mid-40s is they will need to save more if they expect to enjoy an independent retirement," said the Institute's president, Normand Gendron. "Governments need to provide Canadians with more education about the role that different savings vehicles can play in generating retirement income, and provide tools and incentives that encourage more households to save."

According to the study's findings, households that save properly are using some combination of home equity, company-sponsored pension plans, registered retirement savings plans and personal savings to supplement the modest base income they will get from Old Age Security and the Canada/Quebec Pension Plan. Those relying solely on one type of savings vehicle, however, are consistently identified as falling short of their goals. These are the people who will either have to increase their savings significantly or continue to work past age 65.

You should be taking steps to ensure that you will:

• have enough money for a comfortable retirement
• invest it wisely throughout your retirement so that you will not outlive your money

To accomplish this, we recommend that you complete a Financial Road Map, a process that will assess your income needs at retirement and provide a path to follow to save and increase your savings on an annual basis. But more importantly, this "map" will make sure you are accountable to your investment plan. Each year, you should review the performance of your investments in relation to the objectives outlined in it. You can then determine whether you should be changing your portfolio allocation, increasing your level of savings, or if you are doing just fine.

It is nice to know that your retirement savings conform to your retirement dreams. Creating a map will provide peace of mind and prevent nasty surprises in your future.

If you would like us to prepare a Financial Road Map for you and your family, please call our office for an appointment.