Funding your retirement

A recent Equifax study that found seniors’ debt levels increased 6.1 percent in 2016 versus the national average of 3.1 percent, adding the average senior now carries about $16,000 in debt.

We have a different mentality when we compared retiring to today to the experience of past generations. To that end, a lot of seniors — and, for that matter, folks saving for retirement — could use the help.

It used to be that if you had a house, it was paid off before going into retirement, but today it’s becoming more common for people to have a mortgage or line of credit going into retirement.

Natixis Global Asset Management, one of the largest wealth management firms in the world, conducts an annual survey of investors. Here’s the snapshot of its findings for Canadian investors.

·  Personal savings and investments are most important retirement funding source:

·  97 percent indicated personal savings and investments were important.

·  77 percent indicated family sources would be important, too, including inheritance, their spouse, and even their children.

·  74 percent said government programs would be important.

·  54 percent would rely on the sale of their home or business.

Planning for retirement:

·  77 percent have a general figure in mind for how much they will need to save for retirement.

·  60 percent know how much income they need annually to fund their desired lifestyle in retirement.

·  Most Canadians feel it is increasingly their responsibility to fund their own retirement:

·  78 percent feel funding retirement is increasingly their responsibility.

·  32 percent don’t believe government benefits will still be available when they retire.

Not saving enough is the biggest threat:

·  30 percent indicated they worried about not saving enough.

·  18 per cent worried about long-term and health-care costs.

·  14 per cent worried about inflation.

·  13 per cent concerned government pension wouldn’t cover their expenses.

·  12 per cent feared to outlive assets.

·  Seven per cent worried about investment returns not measuring up.

·  Five per cent worried about the death of a spouse.

Canadians are feeling increasingly on their own when it comes to saving for retirement and then managing their money once retired. Only six in 10 had a clear picture of how much they need annually to fund their desired lifestyle in retirement.

Already many seniors are struggling it is a growing problem; the financial health of seniors is not getting better. It’s getting worse. A recent Equifax study that found seniors’ debt levels increased 6.1 percent in 2016 versus the national average of 3.1 percent, adding the average senior now carries about $16,000 in debt.The recent World Economic Forum report on the pension gap globally in which the world’s six largest pension-saving nations, Canada included, face a $224-trillion retirement income shortfall (that is funding retirement to about 70 per cent of income while working) by 2050, dwarfing global GDP.

So, while the seniors of today are facing challenges making their money last, the problems are only going to get worse for generations that follow.

Equally worrying is the potentially costly and difficult-to-predict late stages of retirement, which can have steep health-care costs or require specialized living arrangements.

Retirees could face fewer choices when facing major life changes as a result of failing health if they have outlived their savings and can only rely on Old Age Security or Canada Pension. While long-term care and home care are insured services in Canada, additional savings are critical if individuals want additional care beyond the basic coverage provided by the public system, which will be increasingly stressed by the growing number of senior’s relative to the rest of the population.

Preparing for all outcomes — good and bad — is essential. Holistic retirement planning is especially critical for generations still saving for retirement because of the lack of job security, decreased access to workplace pensions and growing financial complexity they generally face. Ultimately, we’re responsible for our own financial destiny, so we need to make plans now.