Thursday, April 21, 2011


Careers ending earlier than expected, retirees seeking other income

TORONTO, April 20 /CNW/ - There are surprises in store for Canadians who are expecting to retire on a date of their own choosing, according to the 2nd Annual RBC Retirement Myths & Realities poll.

While the vast majority (83 per cent) of "pre-retirees" aged 50 plus believe they will retire on the date of their choice, almost half (41 per cent) of those who have already retired report that their retirement date was unplanned. The top three factors cited for early retirement: employer's request (18 per cent), health reasons (14 per cent) or reaching mandatory retirement age (6 per cent).

"We're finding that even Canadians who think they are well-prepared for their retirement years have not taken the unexpected into consideration," explained Lee Anne Davies, head, Retirement Strategies, RBC. "When their job disappears suddenly, they struggle with financing the added years in retirement that they hadn't counted on. This is where financial advice can ensure all aspects of retirement are explored, including the unexpected."

The RBC poll also found in the past 12 months, there has been a significant rise in the number of retirees returning to the workforce because they need the income (41 per cent in 2011 compared to 32 per cent in 2010), as well as a drop in the number of Canadians retiring debt-free (56 per cent in 2011; 61 per cent in 2010).

Fully retired Canadians, when asked what they would do if at some point their retirement income is not sufficient to support their lifestyle, responded that they would either stay in their present homes but live frugally (89 per cent); move out of their present homes to downsize or rent (87 per cent); or stay in their present homes and sell off assets (65 per cent).

"There are a number of ways to plan out how your retirement years can look," added Davies. "Seeking out good advice before retirement from financial planners can help you determine what you can do now to support your future lifestyle in retirement."

The annual RBC Retirement Myths & Realities Poll compares the perspectives of both retired and not-yet-retired Canadians, aged 50 and over. Related data charts can be accessed via

About RBC's retirement planning and other financial advice and interactive tools

Your Future by Design® is RBC's distinctive approach to help Canadians identify, plan, and realize their goals for retirement. With the guidance of RBC financial planners and investment planners and retirement planners, Your Future by Design helps Canadians create a blueprint for a successful lifestyle and financial plan for retirement based on what is truly important to them in key areas in life, including family, health, home, lifestyle, work/business, mind and spirit, and legacy.

About the RBC Myths & Realities Poll

The 2nd Annual RBC Retirement Myths & Realities Poll, which examines Canadians' expectations and experiences in retirement, was conducted by Ipsos Reid from February 25 - March 7, 2011. For this survey, a national sample of 2,245 adults aged 50 and over with household assets of at least $100,000 from Ipsos' Canadian online panel was interviewed online. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of ±2 percentage points 19 times out of 20 of what the results would have been had the entire population of adults in Canada been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

Rogers Yahoo Finance

April 20, 2011

Wednesday, April 13, 2011


The Economist

The cover story on the newest edition of The Economist, published online Thursday and probably not in “dead-tree” editions until early this week, is entitled 70 or bust!

The influential weekly British newspaper argues “current plans to raise the retirement age are too timid. Governments must go much further.”

By further, it means raising the retirement age to 70, which is a good half-decade beyond the “traditional” retirement age of 65 and 15 years longer than the magic 55 enjoyed only by a handful of fortunates who joined Defined Benefit pension plans early in life and stuck with it.

The lead editorial blames “demography and declining investment returns” as factors conspiring to keep workers chained to their desks longer than most expect or hope.

It notes the life expectancy of the typical 65-year old has improved by four or five years since 1971, a prospect that hit home this week in news stories about centenarian teachers who have collected pensions for more years than they paid into them.

That’s not mentioned by The Economist‘s package of pension stories but there is another oblique reference to Canadian pensions. A sidebar notes the most siblings to reach pension age were 7 sons and 12 daughters born to the Theriault family in Canada between 1920 and 1941: all were still collecting Government pensions in 2007, at which point their ages ranged from 66 to 87.

In another telling sidebar, it says the first American to receive a monthly Social Security cheque was Ida May Fuller, who paid in just $24.75 and had received $22,888.92 by the time she died at age 100.

Secure DB pensions eclipsed by risky DC ones

There’s familiar coverage of the steady decline of Defined Benefit pensions and the corresponding rise of Defined Contribution plans that put more market risk on the shoulders of workers. It concludes workers will need to “fend for themselves,” particularly the massive middle class.

It ruefully reminds us the rich don’t need to worry about retirement while the poor will be supported by the state. Those in the middle used to rely on lifelong employment with firms hosting DB plans but few can do so in modern times. Unfortunately, the amount most have saved in DC pensions or their equivalent (the Canadian RRSP or American IRA) has been woefully inadequate, and what little has been stashed away has suffered from disappointing investment returns.

3 reasons for working longer

Hence the inevitable if depressing conclusion: keep working. The magazine suggests Europeans should raise the retirement age to 70 by 2040 while a slightly younger America could afford to “keep it a smidgen lower.”

Society reaps three big advantages by raising the retirement age: workers get more years of relatively higher wages; the government gets all that extra income tax revenue on those earnings and simultaneously pays out less in benefits; and the economy grows faster.

The challenge, it concludes, is to have high enough state pensions that the elderly who failed to save can survive “without penalizing those who have been thrifty. That is the least people deserve in return for toiling until they are 70.”

That goes right to the heart of the pension debate now occurring in the Canadian election. All three major parties promise to hike the Guaranteed Income Supplement for poor seniors who failed to save. Meanwhile, at the other extreme, the Conservative government is trying to help those who do work and save by doubling contribution amounts in Tax Free Savings Accounts.

The DB vs DC pension debate is also central to the election, since the Liberals want to expand the DB-like Canada Pension Plan but also offer an RRSP-like publicly administered DC plan. The Conservatives want to make it easier for smaller companies to offer workers “pooled” Registered Pension Plans that will likely be DC-like.

No doubt many will conclude private-sector taxpayers should keep working till 70, even as politicians and public-sector workers enjoy full retirement a good ten years before that.

Jonathan Chevreau

National Post
Apr 12, 2011