Will you be poorer in retirement?

Chances are you’ll have more than enough money to retire. The numbers in this infographic speak for themselves.

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by

From the April 2013 issue of the magazine.

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Despite what you may have read, the vast majority of Canadians will not suffer from lack of money when they retire, says Fred Vettese, chief actuary at Morneau Shepell. Only about 7% of middle-income households will have less than 75% of their pre-retirement income, an amount the government says is need for living comfortably. In fact, 62.5% of retirees are on track to have higher disposable incomes in retirement than when they were working.

Source: The Real Retirement: Why you could be better off than you think, and how to make that happen, written by Fred Vettesse and Bill Morneau, Wiley & Sons, 2013

13 comments on “Will you be poorer in retirement?

  1. What a crock! It must have been a survey of government workers and teachers. Lets get in the real world; not the one with rose coloured glasses.

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  2. Unfortunately this information lacks enough detail and context to make it absolutely meaningless, shame on you for printing it. If you had included a baseline such as the average income then perhaps some meaningful information could have been included.

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  3. Clearly just an advert for the book, not meant to provide any useful info for free.

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  4. I'm retired on government pension with 33 years of service still unable to achieves 75%. It will be interesting to find out how the other 92.8% of the retiree reach above 75%.

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    • What's your 75 % 50 k yrs

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      • This is probably one of the poorest written piece on Moneysense. I don't see how it's possible to achieve >115% of pre-retirement income, unless the retirees decide to unload their McMansion NOW, and not after the bubble bursts. Or that they make less than OAS and GIC combined prior to retirement.

        Interested to see how they came up with the numbers because most retirees don't have any savings under their names, except a house.

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  5. I think the keyword is "disposable" income, most seniors are indeed better off than they were in their prime child rearing years – no mortgage payments, no expenses for children, no saving for retirement!. Malcolm Hamilton has a lot of studies that show the same thing. Plenty of people do indeed have more spending money or disposable income after they retire than at say age 35 or 40. The very poor are significantly better off as GIS and OAS can be double or triple what general welfare would be!!

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  6. I don't see how 75% of retiring Canadians can make 95% or more of their current income upon retirement and not be working. Are there that many government/teachers/bankers working today? Anyone in private sector has no pension that provides a steady income. Most are now DC plan as opposed to the traditional DB plans.

    I want more details behind the stats.

    I figure even with $2 to 3million saved by the time we retire and have a fixed return of 5% (presuming interests will rise over the next 20 years) off that capital we are still no where near current incomes. How many Canadians will have that much saved by retirement age?

    More details needed to validate the graph. Or the article is not very useful. Back up the stats please

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    • Good point Chris….Who has anywhere near $2 to $3 Million Dollar Saved…especially if you have children…..My wife(next month) & myself Feb 27 retiring or retired….We will have pensions of $5,000 Net $3800 Net….Neither one of us is near 65 so no Government Pensions…..

      Given the fact that only 50% of people have any RSPs…..Lots of those people will have to continue working until 67 or later….or inherit money ….Depends on lifestyle….Travel, yes or No…Entertain….yes or no….Meals in Restaurants…..yes or no….

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      • Steve, here's what I will be doing (I have no mortgages/ do not owe any money): I am selling my principal residence, moving to my cottage and living on the home (after tax dollars) income in addition to the CPP & OAS that I will be receiving. I will withdraw the minimum amount of $ from my RRSP to avoid the "CLAW BACK" and reinvest the RRSP monies. When 71 years old, I will need to convert all of my RRSP to a RRIF and take out as little as possible to avoid the claw back. When using the RRIF moneys I will naturally reduce the amount of after tax $ that I will be spending (have from the sale of my principal residence) and preserve these $ until such time as they are required. The goal is to avoid the claw back. This will then provide you with extra income. I will live just as well as I did prior to retirement in this fashion (provided there are no children to support).
        PS: The kids stay at home longer these days & you need to figure this into your planning.
        See ya – enjoy the stress
        The old fella is riding off into the sunset ……….

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  7. There is no way I can believe that 93% of Canadians will have 75% of their pre-retirement income. They did say middle income households but this still seems very high.

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  8. I am inclined to believe the article. For one my wife and I were savers throughout our working years. We saved first, paid the bills and then squandered what was left. Today our gross non working income exceeds our working income during our "productive" years.

    Canada provides several beneficial tax and income breaks for its residents, working or retired. In contrast the United States is far from generous. For example US Medicare for the retired pays at best 80% of HC costs. The rest is paid out of pocket or most retired persons buy a Medicare Supplemental Policy. A good policy will run over $3000/year. Medical drugs are far more expensive in the US. Here in Canada not only do we entertain cheaper drug prices but many Provinces offer support for retired persons to purchase their drugs. The US does not have an equivalent to Canada's OAS or its supplemental plans.

    What happens is that a Canadian has less expenses to pay retired then during their working years. If the Canadian was a saver or has a Cadillac retirement package they will do quite nicely. Being your own financial adviser will go a long way to gain wealth. However too many Canadians are unwilling to learn the necessary skills to manage their money so they lose badly over the long run. For the Canadian who places a high premium on personal wealth management over their lifetime the article makes sense and its conclusions are valid. For these reasons it is believable that retired Canadians will do very well as described in the report.

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