Boomers largely lack retirement plans: BMO
TORONTO (Reuters) - Canada's baby boomers are generally ill prepared to pay for retirement living, with few having considered the possibility that they could outlive their savings, a study by Bank of Montreal said on Wednesday.
The baby boom generation started turning 65 this year and within 20 years, all the boomers will be eligible for retirement.
A poll of 1,542 Canadians, conducted by Leger Marketing on behalf of BMO Retirement Institute, found that just under half of those aged 55 or older were planning to, or already had, discussed post-retirement income strategies with a financial adviser.
"If you ask people if they've started a savings plan for retirement, the answer is probably yes, I make my RRSP (Registered Retirement Savings Plan) contributions, or I belong to my company's pension plan," Tina Di Vito, head of BMO Retirement Institute, said in an interview.
"When you are retired and you are no longer adding money into your portfolio, you've got what you've got -- a series of piggy banks -- and this is what you are going to use now to live on for the rest of your life."
Di Vito said there are several important questions to consider: Which account should be withdrawn from first? How much can be withdrawn without using up the money too quickly? What will the tax rate be?
"It's very difficult as a financial planner, if you were to ask me, 'Tina, have I saved enough? Is it going to last my whole retirement?'," she said.
"If you haven't done a post-retirement budget or you don't have any idea of how much you're going to need ... how am I supposed to answer that?"
Only a third of those surveyed had considered the possibility of outliving their savings. Continued...