Tuesday, January 31, 2012

Is Retirement in Canada ‘endangered’

Stephen Harper seems to think that it should be, or at least the government’s role in funding retirement should be reduced or eliminated and is in question.
The government has told the Canadian people that we are in good shape as a country, yet tells the world that we need to make adjustments to our pension program to better weather the current and future economic storms.

The current recession has taken a toll on the financial health of many and retirement savings, which were not adequate for many prior to this current recession, have many of us considering our retirement options. Options we have to start thinking about include continuing to work, working part-time, selling our homes, cutting expenses on food, shelter or health related expenses.  
There are several things that the government needs to consider fixing, Old Age Pensionis one of these items so people will begin to feel confident in the viability of the system, another is to set up a system that encourages younger Canadians to pay more into RRSPs and to start to give more effective advice to retirees that helps them use their financial assets most effectively when they retire.
In the United States, improvements in health of older people and increases in average life expectancy were given as primary reasons for increasing the retirement age.
“It’s time to once again raise the full retirement age, according to Bob Reynolds, the president and CEO of Putnam Investments. This time, Reynolds suggests, we might peg the full retirement age to life expectancy so as to adjust for improvements in the health of older people and increases in average life expectancy.
In 1940, for instance, the average 65-year-old male in the U.S. had a life expectancy of 77.7. In 1990, it was 80.3. And by 2006, it was 81.6. “You have to adjust for that,” Reynolds said. “It’s just too costly.”   If you use the 1940 as the benchmark ratio, the full retirement age could be raised, by to 71 according to Robert Powell of the Wall Street Journal
Reynolds goes on to suggest that there’s a correlation between financial literacy and confidence. To solve the confidence problem, we must solve the literacy problem. According to Reynolds, it’s time to provide the education and tools required to help people understand how much to save and how to invest, how much they will need to accumulate for retirement, and how to make their money last a lifetime once in retirement. Knowledge will lead to action, and action will lead to confidence.
I tend to agree that increasing ones understanding of financial literacy is important to help people prepare for retirement. Anyone looking ahead to retirement may benefit from a written financial plan that will help them define their retirement goals and objectives, and guide them in creating a realistic plan to create a more confident financial future
As Mr. Harper has publically stated that Pension reform read reduction in the dollar amount paid to pensioners or increasing the age at which one qualifies, or both) is one of his governments agenda items he will find that it may have been prudent of him to give us  an idea that Pension reform was on his agenda  prior to the last election. As more and more baby boomers retire, the discussion on retirement, on retirement income, will become a national topic, and the way Mr. Harper has introduced this topic, I think will spark the interest of retirement to all age groups.
Let’s hope that’s the case because the problem is real and we need to have a discussion about the issues, we don’t need to be blindsided by a government that apparently now believes it has a mandate to move Canada to a more right wing social conservative agenda. The social conservative agenda I believe, wants sto put more responsibility on the individual for their own safety net, while the  maintaining government has no responsibility for any safety net for its citizens.

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