Canadians want it all in retirement: BMO report

Fri Feb 18, 2011 3:37pm EST
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TORONTO (Reuters) - Financial advisers need to sit their clients down and have a tough talk about what they really want in retirement and, more importantly, what they're prepared to give up, according to a recent Bank of Montreal report.

The report, titled "Retirement income planning: Can we have our cake and eat it too?" was aimed at the bank's 2,000 financial planners and investment advisers who are facing the first wave of baby boomers heading into retirement.

It looked at the results of a survey that asked 604 retirees and 523 who were nearing retirement about their goals and concerns related to retirement income.

Nearly all of them -- 93 percent -- said that having enough money to maintain their current lifestyle was a key goal.

The respondents also said that being able to cover unexpected expenses was a priority, as were not outliving their savings and having a life-long income stream.

While these are reasonable goals, they can conflict with each other when it comes to retirement planning, Tina Di Vito, head of BMO's Retirement Institute, said in an interview. Without some concessions, it would be nearly impossible for the average retiree to balance both sets of goals.

"When you're spending money from your portfolio instead of adding money, the decisions you make can be critical and can mean the difference between having the wonderful retirement you've planned and having to reduce your lifestyle," she said.

For instance, 69 percent of those within five years of retirement said they would prefer to have a life-time income stream -- available through an annuities or a host of other guaranteed income products -- even if that would mean sacrificing the growth of their capital.

But 67 percent of the same group said that having the financial flexibility to deal with contingencies -- perhaps unexpected health care costs or cash to fix a leaky roof -- was more important than a predictable retirement income for life.   Continued...

<p>A man takes a bath in Biarritz beach, southwestern France, January 10, 2007 as temperatures reached an unseasonably warm 18 degrees Celsius (64 degrees Fahrenheit). France got off to a record-breaking start to 2007, with several cities recording their highest temperature for early January, including Nimes, Marseille, Strasbourg and Lyon. REUTERS/Regis Duvignau</p>