Almost one third of retired Baby Boomers are still working while in ‘retirement’ or have retired once but ended up going back to work, finds a recently released from The Centre for a Secure Retirement.
This new study joins a number of others, including Sun Life’s Unretirement Index, which found 32% of Canadians forecast they’ll be working full-time beyond retirement, and CFIB’s “Saving more for retirement” poll, which found 58% of Canadians indicate they could not afford paying out if there was a mandatory increase in their CPP/QPP.
All of these reports confirm an alarming trend in retirement planning: namely, that retirees just don’t have enough money to retire on.
Ted Wernham, Retirement Income and Asset Manager and President and CEO at Wernham Wealth, has advice for planners looking to manage their Boomer clients’ portfolios:
“Focus on process, avoid product,” he says. “Too many advisors today are anxious for consumers to buy the product, and, because there’s no longer a defined benefit pension plan, Boomers have no idea of what their future income could be. Retirement income is more important than retirement assets.”
Practical advice, indeed.
Another serious consideration for advisors, pending a client’s inability to invest in both a Tax Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP), is to choose one that best accommodates a consumer’s lifestyle. Generally, if a client expects a pension that will place them in a higher tax bracket upon retirement, a TFSA might be preferable to an RRSP. Inversely, if a client expects to be in a lower tax bracket during retirement, an RRSP might be preferable.
Whatever the case, Wernham has a sobering reminder for advisors and clients alike:
“We live on a monthly paycheck, we need to retire on a monthly paycheck.”