Some retirees vulnerable to short term financial shocks, and have long term concerns about making their money last
TORONTO, Jan. 14, 2013 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) poll conducted by Leger Marketing reveals that most of Canada's retirees feel positive about their current finances in retirement, saying they are living the retirement they hoped for today. However, some retirees are concerned they won't be able to sustain their lifestyle over the long term and worry that they will run out of money at a future date.
Key poll findings include:
- 69 per cent of retired Canadians said they are currently living the retirement they hoped for.
- However, 28 per cent said they are afraid of running out of money for their retirement over the longer term.
- Regionally, retirees in Quebec and Manitoba and Saskatchewan were among the most likely to say they are currently living the retirement they planned for (74 per cent), while retirees in British Columbia were among the least likely (60 per cent).
- British Columbia retirees were among the most likely (45 per cent) to say they are afraid of running out of money for their retirement, while Atlantic Canadians were among the least likely (21 per cent)
"While it is positive to see that a majority of retired Canadians are living the retirement they hoped for, our poll findings also show there is concern around whether their retirement savings will sustain them in the years to come," said Christina Kramer, Executive Vice President, Retail Distribution and Channel Strategy, CIBC. "There are some unique factors facing today's retirees as they look to the years ahead, including low interest rates on savings and the need to make their retirement funds last longer than previous generations, which makes long range planning even more important."
Planning Doesn't End With Retirement
While many Canadians focus on how much they need to save in order to reach retirement, it is just as important to focus on how you will convert your savings to income that will last throughout your retirement.
- Only 62 per cent of retired Canadians say they have a plan to help them determine how long their savings will last and how much they can withdraw each year to support their lifestyle.
- Among those with a plan, there was a even split in how they developed their plan - with 31 per cent saying they have a plan with an advisor and 31 per cent saying they have a plan they developed on their own.
"Having a plan you can be confident in can contribute to your peace of mind and allow you to enjoy your retirement with a clear view of how you will make your finances work over the long term," noted Ms. Kramer. "Considering the number of factors retirees face today, a conversation with an advisor can help ensure all components of your retirement are accounted for."
Ms. Kramer also noted that those doing their own planning would likely benefit from reviewing their plan with an advisor. "Even if you choose to do much of your own planning when it comes to your finances, an advisor can serve as a useful sounding board to check your assumptions and offer solutions you may not have considered."
Retirees More Vulnerable to Financial Shocks
While the concerns of today's retirees were primarily focused on the long term, poll results also show that more than half of retired Canadians indicate that a short term financial shock could create a challenge in managing cash flow:
- Given their current income and cash flow, 54 per cent of retired Canadians said that taking on a new $500 monthly payment would be unmanageable
- Within this group, 34 per cent said it would be very unmanageable and 19 per cent said it would be somewhat unmanageable
This suggests that some retired Canadians may not be financially prepared to pay for costs associated with an unexpected emergency - such as needing a new roof or replacing a car - which could add to their concerns about running out of money in the future.
"It's important to plan for your long term retirement goals, but your plan should also include an emergency savings component," said Ms. Kramer. "You may have to reevaluate how much you are able to withdraw each year to ensure you do have savings that could be used in the event of an emergency to avoid taking on a new monthly debt payment that can impact your lifestyle."
Financial Advice for Retired Canadians
- Meet with an Advisor to review your finances - You need to understand how much income you generate from your savings combined with your pension or income you continue to earn. This will help you determine what level of retirement expenses are appropriate for you and allows you to make changes to your retirement strategy today if required.
- Minimize and eliminate debt - One of the most effective ways to make your retirement savings go further is to minimize or eliminate debt repayment in retirement. This reduces interest costs and increases cash flow.
- Plan for tomorrow - today's retirees' are living longer, healthier lives. An advisor can help you develop a comprehensive plan that ensures you have the financial ability to live the retirement you hoped for throughout your retirement, regardless of any unexpected emergencies that may arise.
For Reference - Summary of Key Data
Percentage of retired Canadians that said they are currently living the retirement they hoped for, by region:
Percentage of retired Canadians that said they are afraid of running out of money for their retirement, by region:
Percentage of retired Canadians that given their income and cash flow, taking on a new $500 loan payment would be unmanageable, by region:
Results are based on a CIBC poll conducted by Leger Marketing, via a Web survey. These data were gathered in a sample of 867 retired or pre-retired Canadians between September 18 and 21, 2012.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.