BMO: The Clock is Ticking-Canadian Boomers are More than $400,000 Short of Their Ideal Retirement Nest Egg

BMO: The Clock is Ticking-Canadian Boomers are More than $400,000 Short of 
Their Ideal Retirement Nest Egg 
-- $658,000 is the average amount Boomers feel they each need to have
for retirement, but the average amount they have saved is $228,000  
-- They want to retire at age 59 but believe that they will need to
work until 63  
-- Part-time jobs and selling their homes and cherished possessions
are among ways they expect to earn extra cash to make up for the
financial shortfall 
TORONTO, ONTARIO -- (Marketwired) -- 08/28/13 -- According to a study
released today by the BMO Wealth Institute, Canadian Baby Boomers are
significantly unprepared financially for retirement. The study has
revealed that Boomers are currently, on average, more than $400,000
short of their individual retirement savings goal.  
This is particularly concerning given that the oldest of the Boomers
(defined as those born between 1945 and 1964) turned 65 in 2010 and
many others are just a few years away from retirement age. 
According to Statistics Canada, the average senior couple spent
$54,100 in 2009. "Generally speaking, if a typical middle-class
retirement costs in the area of $54,100 or so a year for a couple,
they will need to determine how much they need to have saved and how
much they can withdraw in order to sustain that retirement
lifestyle," said Chris Buttigieg, Senior Manager, Wealth Planning
Strategy, BMO Financial Group. Mr. Buttigieg added that, based on
historical returns and a four per cent withdrawal rate, retirement
nest eggs should be approximately 25 times the size of annual
withdrawals. This would mean that, to be able to generate $54,100 in
retirement income a year, a retired couple would need to have saved
roughly $1,352,000. 
According to the BMO Wealth Institute study: 


 
--  Canadian Boomers anticipate they will each need, on average, $658,000 to
    feel financially secure in retirement. 
--  Yet they have only saved an average of $228,000, which leaves them
    $430,000 short of their retirement savings goal. 
--  Almost half (46 per cent) are not confident that they will be
    financially secure in retirement, up from 20 per cent in 2006. 
--  Boomers would like to retire, on average, when they turn 59. However,
    they feel they will need to work, on average, until the age of 63. More
    generally, 34 per cent would like to retire in their late 50s (56-60),
    compared to 29 per cent in 2006.  

 
"As Canada's Baby Boomers prepare to head into their retirement
years, many are discovering they don't have the funds they had hoped
would be available and now face the reality that they have little
time to play catch-up," said Mr. Buttigieg. "However, it's
encouraging to see that they are being realistic about their
retirement needs and are considering other ways to manage the
shortfall." 
How Boomers plan to make up for their lack of retirement savings? 
In addition to delaying retirement, the study also found that
Canadian Boomers plan to generate income in a variety of other ways: 


 
--  Almost three-quarters (71 per cent) of Boomers expect to take on a part-
    time job to earn extra income after they officially retire. 
--  Forty-four per cent will sell off collectibles, antiques or possessions
    they no longer use. 
--  About one-third (32 per cent) expect to sell their home, while 19 per
    cent will rent out part of their home for additional income. 

 
"The study's findings should send an urgent message to younger
Canadians that they have to think beyond their immediate day-to-day
financial needs and always have an eye on their future, particularly
their retirement," said Mr. Chris Buttigieg.  
Mr. Buttigieg concluded, "The game plan for young Canadians is clear:
imagine what you would like your retirement to look like, work with a
financial professional to develop a straightforward financial plan
that aligns with your goals and objectives, open an RRSP or TFSA as
soon as you start your first job, and start putting money aside from
an early age. By doing so, they can help ensure that their financial
transition from work to retirement is easier than the situation many
Boomers are facing today." 
Regional Data 


 
----------------------------------------------------------------------------
                            Total    ATL     QC     ON  MB/SK     AB     BC 
----------------------------------------------------------------------------
Average ideal retirement                                                    
 age                           59     58     59     59     61     59     58 
----------------------------------------------------------------------------
Average actual age of                                                       
 retirement                    63     63     61     64     62     64     64 
----------------------------------------------------------------------------
Confident that you will be                                                  
 financially secure in old                                                  
 age                           54%    66%    58%    53%    44%    50%    48%
----------------------------------------------------------------------------

 
Survey results cited in this report are from a Pollara survey with an
online sample of 1,003 yet-to-retire Canadians 18 years of age and
older, conducted between August 2 and August 7, 2013. A probability
sample of this size would yield results accurate to +/- 3.1%, 19
times out of 20.  
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $549 billion as at July 31, 2013, and more than
46,000 employees, BMO Financial Group provides a broad range of
personal and commercial banking, wealth management and investment
banking products and solutions. 
Contacts:
Media Contacts:
Amanda Robinson, Toronto
(416) 867-3996
amanda.robinson@bmo.com 
Ron Monet, Montreal
(514) 877-1873
ronald.monet@bmo.com 
Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com 
Internet: www.bmo.com
Twitter: @BMOmedia