THE CHANGING RETIREMENT INCOME LANDSCAPE
Fewer than one in three working Canadians has a guaranteed pension plan. 1
Canadians are living longer than ever before and very few have access to traditional sources of retirement income, such as workplace pension plans. In fact, between 1982 and 2011 participation in defined contribution plans grew by 294.4 per cent while participating in defined benefit plans grew by only 2.7 per cent2. While defined contribution plans will potentially offer employees more choice, and more control for their retirement income by allowing them to invest their funds as they choose, they do not provide employees with a guaranteed income in retirement. This can make it difficult for people to accurately plan for how much they will earn in retirement, creating a significant challenge when it comes to retirement planning.
Fortunately, your financial security advisor can help. According to the Towers Watson 2012 Survey of Pension Risk, 72 per cent of Canadian employees either agreed or strongly agreed that they are more concerned about pensions than they were 24 months ago. As part of your retirement income plan, you may wish to work with your financial security advisor to look at your guaranteed income from all sources and identify any gaps between the money you’ll have coming in and the income you’ll need.
You can discuss:
- Your level of guaranteed income
- How much you plan to spend
- Recommended income solutions that will
RRSP 'road to success' tips
1. Have a plan
Your financial security advisor can help you create a plan so you can figure out where you want to go (your savings goal) and how to get there.
2. Contribute early
If you start saving early, your money will have more time to grow. It's never too late to put yourself on the right path.
3. Understand your options
Recognize withdrawal implications, and that there is some flexibility through the RRSP Home Buyer's Plan and Lifelong Learning Plan.
4. Be aware of timelines
Know the annual RRSP contributions deadline and when it's time to covert your plan to income at age 71.
5. Re-evaluate often
Re-visit your plan annually and when life changes. Your financial security advisor will work with you to make sure you're on track to achieve your goals.
1 Source: Statistics Canada, Pension Plans in Canada and Labour Force Survey, 2011
2 Source: Towers Watson, Survey of Pension Risk, 2012