News Releases

• Fewer than half have post-retirement income strategy in place
• Only 1/3 have considered the possibility of outliving their savings
• Less than half have considered funds for unexpected expenses

TORONTO, June 9, 2010 - According to a survey commissioned by the BMO Retirement Institute, fewer than half (48 per cent) of the millions of Canadians aged 55 and older currently have a retirement income strategy in place.

BMO released the findings on the heels of the latest Statistics Canada report indicating that all boomers will be eligible for retirement within the next 20 years.

"Living off of retirement savings is different than saving for retirement. As Canada's boomers draw closer to their retirement years, having a strategy to manage investment income throughout retirement should be a top priority," said Tina Di Vito, Head, BMO Retirement Institute. "Financial resources available through programs such as the Canada Pension Plan and other pension schemes likely won't be enough to support the average retirement lifespan. The onus is on individuals to be prepared in order to live out their desired retirement lifestyle."

The study, conducted by Leger Marketing, indicated a lack of preparation for factors that can directly impact income and expenses during retirement. Other key findings from the survey include:

• Less than half (48 per cent) are planning or have already discussed their post-retirement income strategies with a financial advisor, including how they will structure their investments and plan for financial contingencies.
• Only one-third (33 per cent) have considered the possibility of outliving their savings, despite numerous studies released over the past several years estimating an increase in life expectancy among the Canadian population.
• Fewer than half (48 per cent) have planned financially for the unexpected.
• A similar number believe unpredictable factors such as personal or family health care issues (55 per cent) and inflation (64 per cent) will have a negative effect on their post-retirement income.

The results clearly underscore the need for the country's boomers to shift their focus from saving for retirement to retirement income planning in order to make certain their investments will support their desired retirement lifestyle.

"A fundamental element to successful financial management is to ensure strategies are aligned properly with current life stages," said Ms. Di Vito. "Those in the 55-65 age range may need to restructure their investments, develop financial contingency plans and possibly make course corrections to their overall portfolios. It's critical that they speak with a financial advisor in order to determine just what needs to be done to ensure a successful transition."

For the millions of boomers contemplating post-retirement plans, BMO offers the following advice:

• Understand Employer and Government Pension Plans - While employer sponsored pension plans are becoming increasingly rare and government/public pension programs only provide a basic level income, it is important that people understand what they are eligible to receive and factor it into their investment savings strategies.
• Plan for Taxes on RRIF Withdrawals - Withdrawals from Registered Retirement Income Funds (RRIFs) are taxed as interest/salary income - even if the growth in the plan was derived from a combination of dividends and capital gains. Canadians must take this into account when creating post-retirement plans to avoid unpleasant surprises. More generally, individuals should understand how RRIFs work including what types of investments are RRIF-eligible, when you can start drawing income, the minimum you must withdraw each year and how this is determined.
• The Earlier the Better - Those with retirement on the horizon may need to restructure their investments, begin framing financial contingencies and creating monthly budgets in order to adapt with ease to a new financial reality. BMO advises retirement-bound boomers to speak with a financial advisor ahead of the game to ensure the proper adjustments are put in place.

The survey was completed with 1,542 Canadian adults and was conducted using Leger Marketing's web panel between April 12 and April 15, 2010.