Recent surveys* reveal that a large majority of so-called Baby Boomers are uncertain about their preparation for retirement. Arguably, the have it my way? generation did not all follow in their parents' footsteps when it came to saving for the future. As well, some major bumps along the way (a housing crisis, a stock market crash and a global financial crisis) have reduced many retirement 'nest eggs.'
In a 2010 report to the Minister of Finance, it was found that approximately 160,000 Canadian seniors were not aware of the full range of benefits they were entitled to in their retirement years. In fact, nearly $1 billion in retirement benefits from the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) have not been paid out to eligible recipients.
According to the Service Canada website, seniors may qualify for a number of income supplement programs that would help them make ends meet, including:
One of the top retirement goals for many is travel. As many as 1.5 million so called 'snowbirds' travel to the Southern United States during the winter. With summer just around the corner, thoughts turn to travel within our borders, too. The Canada Safety Council states that a few simple precautions can help ensure a safe, healthy and enjoyable trip any time of the year.
Retirement used to mean a gold watch, a pension and spending time on hobbies or new pastimes. For some this may still be true, but times have changed and there are new realities that will affect how retirement will look in the future.
The largest segment of the population in Canada today, the so called Baby Boomers, will be starting to retire in large numbers soon. Those born in 1947 are considered the first Baby Boomers and will be reaching age 65 in 2012. Many are in a position to retire now and some already have.
On May 25, 2009 Finance Canada announced some proposed changes to how Canada Pension Plan will work.
If approved, the changes will take effect over a period of time from
2011 to 2016, so they will affect anyone planning to retire after 2010.
Below is a brief summary of some of the most important changes:
Early retirement (before age 65) will result in a reduction in CPP benefits by 7.2% per year, which is up from the traditional 6%. This means that if you
begin to take your pension at age 60, your payments will be cut by 36%, not 30%.
Retirement funding is a complex machine, with several moving parts. For many Canadians employer pensions and government benefits will make up the core of their retirement income.
A recent RBC survey found 54% of Canadians expect their pension will be the largest source of income, but when asked what kind of pension they have, 19% do not know.
Personal savings, whether in the form of an RRSP or non-registered savings, help pad out the post-career lifestyle, but only 18% of Canadians said personal investments would be their largest single source of income.
Ralph and Louise have seen the TV commercials featuring Gordon Pape, the financial author, as the spokesman for Canadian Home Income Plan Corp. (CHIP) reverse mortgages. They were wondering if it would be a good way to go to help ease their current financial situation.
Roger and Linda are approaching their retirement. With continuing volatility in the markets, they are concerned about what effect a market downturn in the few years leading up to or just after retirement would have on their income. They also think that GIC investments would not protect their retirement income very well from inflation.
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