We are experiencing a silver Tsunami. The leading edge of the Boomers turned 65 four years ago. On average, 1250 Canadians turn age 65 every single day. It's part of a 20 year trend. But, most of the Boomers weren't born in 1946-47. Most were born between 1961 -1965. That's why you feel everyone has been turning 50. And people are living longer, much longer.
With all of this happening, it's small wonder that the media, politicians and the financial services business are all talking about retirement. That kind of focus may be good, because of what it means for savings habits and pressures on goods and services. The worry is whether Canadians are saving enough. There are lots of myths we have to watch; lots of myths we need to challenge, if we all want to be successful dealing with adequate retirement income that lasts a lifetime.
We are buried in data, but starving for information that is relevant for us. Retirement planning is relevant...and for everyone, including you.
The definition of retirement is changing and even though it may seem like a long way off, work that to your advantage. Starting a plan and sticking to it are the hard parts, just like diets and exercise. Every little bit helps and makes it easier if you start early enough.
Harness the power of compound interest, where planning and saving a little now on a regular basis can let money work for you, 24 hours a day, 7 days a week, for decades. Your money seems to grow slowly at first, and then starts to balloon as you get older, even if you put in the same amount of money. Every year you delay means you'll need to save more money and perhaps take on more investment risk in order to reach your goals.
Ten retirement myths worth challenging
1. Government benefits will be enough
CPP and OAS are important, but for most households they are only part of the plan. Retirement usually works better when you know what level of private savings or guaranteed income you still need on top.
2. Retirement is short
Many people now spend decades in retirement. That makes longevity risk real. A plan that looks comfortable for 10 years may feel very different over 25 or 30.
3. You can start later and easily catch up
Late starters can still build a better plan, but the math gets harder. Every year you wait usually means saving more aggressively, taking more investment risk, or lowering the lifestyle you expect later.
4. Being mortgage-free solves the problem
Removing debt helps, but retirement budgets still include food, housing costs, travel, healthcare, family support, and taxes. A debt-free home does not automatically create reliable monthly income.
5. Retirement planning is only about investments
Investments matter, but so do taxes, withdrawal strategy, estate planning, and insurance. In some cases, a guaranteed income solution such as a life annuity can play a role beside market investments.
6. Conservative investing removes all retirement risk
Holding only low-volatility assets can reduce short-term stress, but it can also create inflation risk and spending risk if returns stay too low for too long. Safety and sustainability are not always the same thing.
7. You should never consider an annuity
Annuities are not right for every retiree, but dismissing them outright is another myth. For some households, guaranteed lifetime income is valuable precisely because it covers core bills and reduces the pressure on the rest of the portfolio.
8. Insurance no longer matters once children are grown
Permanent coverage can still matter for a spouse, taxes, final expenses, or estate liquidity. Retirement planning and life insurance sometimes overlap more than people expect.
9. Selling the house will solve everything
Home equity can be part of a plan, but it is not always liquid, predictable, or emotionally easy to use. It should be treated as one tool, not the whole strategy.
10. One retirement plan will last forever
Retirement planning is not a one-time event. Markets change, health changes, family goals change, and spending changes. A plan should be reviewed as life changes.
If you are trying to turn savings into dependable retirement income, our team can help you compare drawdown options with guaranteed-income solutions such as annuities and review how those choices fit into your broader plan.
©2020 by Peter Wouters. Republished with permission by Peter Wouters.