It's Your Money  

Troubling concerns in report on Canadians' readiness for retirement

Preparing for retirement

On Nov. 29, Deloitte (one of the “big four” accounting firms) published a sobering report called “Running out of time,” revealing that a majority of Canadians are unprepared for retirement.

The survey that fuelled the report suggests a staggering 55% of near-retiree households will have to make lifestyle compromises to avoid outliving their financial savings. This figure is expected to climb to 73% when accounting for unexpected expenses like health care, long-term care costs and one-off expenses. It went on to say only 14% were actually “retirement ready”.

Deloitte's survey sheds light on a concerning reality—a significant portion of Canadians may face significant financial challenges during their retirement years.

As we delve into the profound implications of this survey, it becomes imperative to understand the reasons behind this lack of preparedness and, more importantly, explore actionable steps individuals can take to secure their financial future.

The survey, conducted among a diverse group of individuals, outlines various factors contributing to this lack of preparedness. These include inadequate savings, rising healthcare and living costs, and an underestimation of the financial needs in retirement.

So what should you do? Here are steps to consider to avoid outliving your retirement savings:

Assess your current financial situation—The first step in avoiding the risk of outliving retirement savings (and for building a proper financial plan) is to assess your current financial situation. Take stock of your savings, investments, and other assets. Understanding your current financial standing provides a foundation for making informed decisions about your retirement strategy.

Create a realistic budget—Develop a realistic budget that aligns with your lifestyle and financial goals in retirement. Consider all potential expenses, including healthcare, housing, and leisure activities. A well-thought-out budget can serve as a roadmap, helping you allocate resources efficiently and avoid unnecessary financial strain.

Maximize contributions to retirement accounts—Take full advantage of retirement savings vehicles, such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs). Deloitte's survey underscores the importance of maximizing contributions to these accounts, as they offer tax advantages and can significantly boost your retirement nest egg.

Invest strategically—Review and adjust your investment strategy to align with your retirement goals. While some risk is inherent in investing, a diversified and well-balanced portfolio can help manage risk and optimize returns. Consider consulting with a professional financial planner to ensure your investment strategy aligns with your risk tolerance and long-term objectives.

Stay informed about government benefits—Keep abreast of changes in government benefits and programs that can support your retirement income. Understanding the eligibility criteria and maximizing your entitlements can provide additional financial security in retirement.

Consider delaying retirement or phasing into it—If possible, consider delaying your retirement or phasing into it gradually. This approach allows you to continue earning income, contributing to retirement savings and potentially delaying the need to dip into your savings. It can also provide a smoother transition into the next chapter of your life.

Explore additional income streams: Identify opportunities for additional income streams in retirement, such as part-time work, freelancing, or monetizing hobbies and skills. Supplementing your retirement income can help bridge financial gaps and provide peace of mind.

Deloitte's recent survey and report should serve as a wake-up call for Canadians to reassess their retirement preparedness and take proactive measures to avoid the risk of outliving their savings.

The path to a secure retirement requires careful planning, adaptability, and a commitment to staying informed about evolving financial landscapes.

While the survey's findings are concerning, they also present an opportunity for Canadians to take control of their financial destinies and ensure a more comfortable and secure retirement.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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