Five things that can sink your clients’ retirement ship

Most clients dream of cruising off into the sunset in retirement, but the journey is rarely that easy and carefree. This month’s Global View deals with five things that could scuttle clients’ retirement plans, and offers some helpful advice to keep them on track.

• Going it alone. A Global News report by Maham Abedi focuses on how more Canadians are living alone and living longer. According to a TD Bank survey, 65% of Canadians over the age of 40 are single and say they will likely be living alone after retirement. Of those, almost half are worried about using up their retirement savings too quickly. Abedi points out the pros and cons of flying solo and offers tips to help singles cope.
• Underfunded pension plans. Sears Canada paid out millions in dividends while its employee pension went underfunded, points out Toronto Star business reporter Francine Kopun. Even worse, according to the Canadian Centre for Policy Alternatives many of Canada’s largest companies had defined benefit plans in a deficit position in 2016. This article serves as a clear reminder that clients counting on defined benefit pension plans may not want to count their chickens until they hatch.
• Keeping up with the Joneses. Terrence McEachern solicits some solid advice for the high number of Canadians living paycheque to paycheque in an article for the Chronicle Herald. This stuff isn’t new (set up an automatic savings plan, don’t compete with cash-rich neighbours and friends, etc.) but it bears repeating.
• Renting without saving. While clients may think of a mortgage as their largest expense, Jessica Chin, writing for HuffPost, makes the case that it’s also forced savings. Since owning a home may never be in the cards for many Canadians today, Chin attempts to answer the question: How much should you save for retirement if you’ve been forced into renting?
• Living on the wrong side of the financial tipping point. In this Financial Post article, Ted Rechtshaffen argues clients can best deal with longevity risk by calculating and attempting to achieve their “financial tipping point”—an asset level that not only provides enough to live off, but that continues to grow every year. His basic premise: as living to 100 becomes increasingly likely, those who achieve that goal “will be in much better shape to enjoy the ride.”

You might also like…

• What happens when the holder of a TFSA dies?
• Keeping up with the Joneses — are lifestyle choices affecting retirement plans?
• Retirement income: How to get your clients their best withdrawal rates