Let’s Get Real About Retirement

Like our parents before us, we work most of our lives to get to retirement – that much-anticipated state when we can truly be master of our days.

But unlike our parents, we cannot expect to simply fund our retirement with government programs such as the Canada Pension Plan (CPP) and Old Age Security (OAS), combined with whatever savings and investments we managed to build over time. Yet this is what how many Canadians are planning for retirement. According to an Ipsos Reid Poll conducted on behalf of Sun Life Financial, the average Canadian expects to draw 80 per cent of his or her retirement income from government and employer pension programs, personal savings and investments. The remaining 20 per cent is expected to come from home equity, inherited money and other miscellaneous sources. Chances are, these expectations won’t align with the actual realities of retirement.


New Realities of Retirement The retirement experiences of the Baby Boomer generation are, and will continue to be, different than those of preceding generations. Thanks to advances in modern medicine, people are living longer and today’s cohort of retirees is healthier and more active than their predecessors. But many are also being weighed down by the dual responsibilities of caring for elderly parents while still providing for their own kids. The financial realities of retirement have also changed. Lower interest rates mean lower retirement income from investments, and there are concerns about the long-term sustainability of government assistance programs. The Canadian government has, in fact, started a program that promises higher payments if you put off collecting your CPP – an incentive that’s of little use to those who pass away before they even get their first pension payment. At the same time, retirees are facing higher bills because of inflation.

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