A Canadian Look at Retirement

In Financial Planning on March 15, 2012 by

WHO SHOULD CARE:  Government, Employer, Company, Family or You?

RRSP Season recently wrapped up.  In the midst of client meetings and industry seminars I heard an alarming stat:

“70% of people in Canada approaching retirement do not know where their income will come from once they’ve retired.”

Questions I asked myself:

  • Have these people not given any thought to retirement whatsoever?
  • Could a percentage of these people retire comfortably even though they haven’t defined a clear goal?
  • Do these people have enough assets so that if allocated properly could generate a dependable retirement income stream?

I know that retirement isn’t simply a matter of turning 65, getting a gold watch, and saying goodbye to the workplace.  Obviously retirement patterns vary across industries and the process of considering it is complex.  We must evaluate family situation, contractual arrangements, contemplate which financial vehicles to allocate money and then hope that these vehicles maximize income producing sustainability…  It’s a lot to think about!

Is there a mathematical formula out there that can answer this? 

Fortunately there are many resources available to help.  Professionals, academics, advisors and regular people have created solutions for solving the magical mathematical equation for retirement freedom.  Dr. Moshe Milevsky, a finance professor at the Schulich School of Business in Toronto helped to develop Canada’s first retirement income analysis tool based on Product Allocation for Retirement Income using algorithmic methods.  He notes that asset allocation can account for 90-95 per cent of investment performance and success when Canadians save for retirement. But as they approach and move into retirement, the type of financial products investors own will determine their financial health in their post-working years.

Watch Dr. Milevsky discussing product allocation.

If you or someone you know needs help organizing their assets for retirement it’s a great idea to speak with an advisor that can help eliminate risk.  The average Canadian spends less than 15 minutes per year thinking about their financial plans.  How much time do you spend?

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