News Releases

TORONTO, December 7, 2005 – BMO Financial Group today announced the preliminary findings of The BMO Retirement Trends Study, the most comprehensive survey on Canadian retirement compiled to date. The survey, conducted for BMO by Ipsos Reid, canvassed 5,325 Canadian financial decision-makers 45 and over, revealing an optimistic group, with 87 per cent stating that the word retirement should be redefined because it doesn’t mean today what it meant years ago.

"The research corroborates our growing body of qualitative and anecdotal evidence from clients that the notion of retirement is changing. The survey illustrates a population that is both positive and confident in their expectations. However, the telling statement about the ‘new retirement’ is that pre-retirees expect to keep working into their so-called retirement years," said Caroline Dabu, Vice President, Marketing and Client Strategy, BMO Financial Group. "The consistent theme tying all of these stories together has been a fundamental desire to stop talking about stereotypical and often idealistic notions of retirement. To not look at retirement as a fixed point in time, but as a transition between fulltime work and active retirement."

The BMO Retirement Trends Survey offers a forecast of the kind of life Canadian retirees and pre-retirees envision for their future. The survey findings include:

They should redefine the word retirement because it sure doesn’t mean today what it meant years ago. Close to nine out of 10 (87 per cent) Canadians 45 and older agree with this statement.

No more doom and gloom. Contrary to the perception of people feeling anxious about retirement, there is a sense of optimism shared by both retirees and pre-retirees. The top phrases selected by both groups to describe retirement, included "freedom," "more leisure time," "the next stage of my life," "fun" and "confidence". According to both groups, the least relevant phrases included "anxiety," "loneliness" and "uncertainty." In fact, 74 per cent of retirees and 73 per cent of pre-retirees picked "freedom" while only five per cent of retirees and 7 per cent of pre-retirees chose "anxiety."

Ideally, pre-retirees and retirees would prefer not to work. When asked ideally how they would like to spend time in retirement, both retirees and pre-retirees think alike – preferring not to work, regardless of their current retirement status, age, gender and level of wealth. They ranked their responses in the following order:

In reality, pre-retirees will work more than their older counterparts. When pre-retirees were asked about working after traditional retirement, 58 per cent plan on working for an employer in some capacity and 50 per cent expect to spend some time working for their own or family business when they retire. Only 16 per cent of current retirees spend a great deal or some time working for an employer and 17 per cent of currentretirees spend a great deal or some time working for their own or family business.

Working longer is about staying active. The primary reason pre-retirees expect to be working in retirement is to be "mentally active" (71 per cent), followed by "to keep in touch with people" (63 per cent), "to earn money" (61 per cent), "to be physically active" (56 per cent), "to keep busy" (51 per cent) and "to keep from being bored" (49 per cent).

Men and women appear to retire for different reasons. While responses to other reasons for retiring are similar between men and women, men are more likely than women to have retired because they "felt they had enough money to retire" (31 vs. 19 per cent for women). Women are more likely than men to have retired because they "wanted to spend more time with family" (15 vs. 11 per cent for men) or because of a "health condition" (21 vs. 16 per cent for men). Men are also slightly more likely than women to feel that their lifestyle has turned out to be better than expected (29 vs. 25 per cent).

Becoming more charitable with age. The likelihood of spending or expecting to spend a great deal of time "doing non-profit work or charitable work" increases with age: 15 per cent of those 45-54, 16 per cent of those 55-64, 23 per cent of those 65-70 and 22 per cent of those 70-plus spend and expect to spend a great deal of time on this activity.

$3,500 the average monthly income desired in retirement. When asked about funding retirement, a majority of pre-retirees (66 per cent) saw it from a monthly income perspective, with $3,500 as the average. Almost a quarter of those surveyed (24 per cent) considered retirement funding from an annual income stream perspective, with $54,700 per year as the average. Only a very small proportion (8 per cent) had a lump sum in mind, with $649,500 as the average amount.

Two thirds of retirees and pre-retirees have or will have debt in retirement. Sixty-four percent ofretirees carry debt into retirement and among these, more than one in four (28 per cent) don’t feel comfortable with their amount of debt. More than two thirds (68 per cent) of pre-retirees expect to carry debt into retirement.

"The results of this comprehensive study provide an unprecedented preview into the future of the Canadian retirement landscape. While there are some areas of concern, contrary to popular doom and gloom scenarios, our research paints an optimistic picture of a vibrant segment of the population ready to move on to an exciting phase in their life," said John Wright, Senior Vice President, Ipsos Reid.

Implications of a new retirement

"The traditional approach to retirement planning has not only been narrow and formulaic; it has been based on outdated assumptions about what retirement looks like. Retirement planning has been focused primarily on asset accumulation. What our research shows is that there also needs to be an emphasis on planning for the income needed during the transition from a career and during active retirement," said Dabu.

Also unveiled today was the BMO Financial Group Retirement Your Way web site, found at www.bmo.com/retirementyourway. The new site provides an overview of the new realities to consider in the retirement planning process, supplemented with case studies and external resources that will be updated on an ongoing basis.

The site is also home to the new Transition tool for the new breed of 45-plus Canadians. With the understanding that retirement does not take place at a fixed point in time but is a transitionbetween fulltime work and fulltime retirement, the online tool illustrates the impact that this transition can have on clients’ retirement savings plans. BMO is currently developing other products and solutions for launch in the New Year.

Survey Methodology

These are the findings of an Ipsos Reid/BMO online survey conducted from October 21 to October 27, 2005. For the survey, a randomly selected sample of 5,325 financial decision-makers age 45 or over with at least $25,000 in financial assets completed an online survey. With a sample of this size, the results are considered accurate to within ±1.34 percentage points, 19 times out of 20, of what they would have been had the entire Canadian population of 45 years or over with at least $25,000 in financial assets been polled. These data were weighted to ensure the sample's regional and asset composition reflects that of the actual Canadian population according to the 2001 Census data. Please visit www.ipsos.ca for full tabular results.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of more than $297 billion as at October 31, 2005, and more than 33,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions. BMO Financial Group serves clients across Canada through its Canadian retail arm, BMO Bank of Montreal, and through BMO Nesbitt Burns, one of Canada’s leading full-service investment firms. In the United States, BMO serves clients through Chicago-based Harris, an integrated financial services organization that provides more than 1 million personal, business, corporate and institutional clients with banking, lending, investing, financial planning, trust administration, portfolio management, family office and wealth transfer services.

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