News Releases
According to the BMO Retirement Trends Study, the most comprehensive survey on Canadian retirement compiled to date, more than half (54%) of Canadian financial decision-makers 45 and over think they know how much money they'll need in retirement. Of these respondents, 66 per cent consider their retirement income needs from a monthly perspective, not an annual figure or lump sum dollar amount as commonly used in the financial planning industry.
“Financial planners have traditionally worked with investors towards a yearly income stream goal,” explained Tina Di Vito, Vice President and Managing Director, Retirement Planning, BMO Nesbitt Burns. “Our survey results question this approach, showing that the average investor looks at income stream from a monthly perspective, with the average goal for retirement being a monthly income of $3,500.”
Only a quarter of those who have a dollar figure in mind for retirement needs (24%) consider retirement funding from an annual income stream perspective, with $54,700 a year as the average. A very small proportion (8%) had a lump sum in mind, with $649,500 as the average amount.
“Breaking retirement income down into monthly bundles is ultimately a much more practical and tangible way for pre-retirees and retirees to conceptualize how they're going to fund their lifestyle in retirement,” said Di Vito.
The survey, conducted for BMO Financial Group by Ipsos Reid, canvassed 5,325 Canadian financial decision-makers 45 and over. The most significant change uncovered by the survey is the emergence of a transition stage that exists between traditional careers and full retirement.
The BMO Retirement Trends Study also illustrates that this 45-and-older cohort is not a homogenous group. There is a segment that feels prepared, optimistic and ambitious about the next stage of their life. The other group feels they may not be as prepared and need to make some adjustments, such as a longer transition period between work and ‘active retirement'.
“These results truly reinforce the fact that retirement is changing, and that financial instituti
“Retirement is no l
While the same basic principles that have been traditionally used still apply, Di Vito offers the following tips to start planning for today's retirement reality:
- Step back and ask yourself not just when you will retire but what will you do and how will you spend your time. If you have an ideal notion of how you will spend your time, do a realistic assessment of its affordability.
- Be realistic about your willingness to downsize your lifestyle or to maintain it.
- If you are not comfortable entering your transition or retirement years with debt hanging over you, pay down as much of your mortgage and debt as you can.
- Maximize your savings program.
- Don't count on the government to fund the bulk of your retirement savings.
- Prepare for contingencies, such as ill health or relocation.
- Be realistic about inheritances.
- Understand what impact a transition period may have on your saving needs.
To provide a customized snapshot of what that transition stage could look like, BMO Financial Group has created an online tool available at www.bmo.com/retirementyourway. Individuals input their current age, the age that they want to retire, how much their current retirement savings are, and then they adjust all of the variables to determine how long that transition phase between full-time work and active retirement will be.
Plans for Retirement Income
During this transition stage that exists between traditional careers and full retirement, the Canadians surveyed draw or expect to draw from many different income sources. Most commonly cited income sources include government pensions (89%), sheltered investments such as RRSPs and RRIFs (78%), employer pensions (72%), other non-sheltered investments (51%) and continued employment (31%).
The study also found that more than half (54%) of the respondents know how much money they need for retirement. Quebecers are most likely to have a dollar figure in mind (60%); and men (56%) are more likely than women (49%) to be focused on a specific goal.
Given that
The survey respondents had the following plans for their retirement income:
- Funding own retirement: 81%
- Supporting children or grandchildren: 12%
- Building a legacy: 6%
- Supporting parents: 2%
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
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