Almost half (46%) of Canadian baby boomers feel financially unprepared for retirement, up from 20% in 2009, finds a BMO study. And the average boomer is more than $400,000 short of his individual retirement savings goal.
“As 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,” says Chris Buttigieg, senior manager, Wealth Planning Strategy, BMO Financial Group.
Statistics Canada finds the average senior couple spent $54,100 in 2009. Buttigieg says based on historical returns and a 4% 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 couple would need to have saved roughly $1,352,000.
Additional findings from the study include:
- boomers anticipate they’ll need, on average, $658,000 to feel financially secure in retirement;
- they’ve only saved an average of $228,000; and
- boomers would like to retire when they turn 59, but now feel they’ll need to work until 63.
To make up the short fall, 71% will take on a part-time job; 44% will sell collectibles, antiques or possessions they no longer use; 32% will sell their homes; and 19% will rent out part of their homes.
“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 futures,” adds Buttigieg.
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