Monthly Archives: January 2012

Not Saving Enough for Retirement!

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Not Saving Enough for RetirementA recent poll released by one of the big Canadian banks, CIBC, indicates that a large percentage of Canadians are not financially prepared for their retirement! This may come as a surprise to many people in the US who have the impression that Canadians are conservative savers and have a sound banking system. We may have the banking system but many of us have not taken advantage of everything we should have done over the years and now face a retirement that is going to be less than what we thought or planned for.

Not Saving Enough for Retirement

Key findings of the poll by CIBC include: 44 percent of all Canadians say they are not financially prepared for their retirement. Also among Baby boomers at the leading edge of the boom (aged 55-64), 31 percent say they do not feel financially prepared for retirement. Are Americans in a similar situation? Most likely and probably worse if you listen to all of the news reports!

Having a Plan Improves Your Optimism

A lot of people have their heads in the sand because they are afraid to find out just how bad their situation is relative to retirement. They are afraid of what a plan will tell them so they simply do not want to know. The reality is actually far from the truth. Although your situation may not be great, finding out exactly where you are at financially with respect to retirement can be enlightening and helpful. At the very minimum, you will find out exactly what you need to do to get into a better place with respect to saving enough for retirement.

The same poll by CIBC found that among Canadians who say they have a long-term investment plan for retirement, 76 percent say they are financially prepared for retirement, versus just 25 percent among those who don’t have a plan. That is very significant! Having a plan lets you set goals to help you get to were you need to be financially and helps you meet those goals as well

Plan all Year Long, Not just at Tax Time

Reviewing your plan at tax time is better than not having a plan at all. However, you really should sit down with your spouse. Review your retirement plan several times a year. Update assumptions about your retirement. If there are changes update your plan with current values so that you are never surprised. Another advantage of updating your plan several times a year is that you can make decisions immediately. Increase savings for retirement during the year instead of at the end of the year when you have lots of other expenses.

Continuing to work during Retirement

This same poll by CIBC indicated that fully 69 % of Canadians who are at the age of 65 or older plan to continue working during retirement. Boomers younger than 65 appear to have accepted the reality that they will need to work past 65 to maintain the lifestyle they need for retirement. If they have not saved enough for retirement, this is really the only option they have.

If you are not yet 65 or have retired, now is the time to complete an assessment of your finances. Take steps to at least make your retirement as comfortable as possible. Here are a couple of steps to take if you feel that you are not saving enough for retirement or do not know if you have enough for retirement.

  • Meet with an Adviser
  • Build your plan or Review your Retirement Strategy
  • Contribute regularly to a retirement savings plan:
  • Manage and Track Day to Day Spending against a budget
  • Prepare for the Unexpected i.e. have an emergency fund

Not Saving Enough for Retirement: Get Active Today

The steps above are pretty basic and easy to follow with the help of an adviser.  Are you are laying in bed awake at night losing sleep? Will be ok financially in retirement. Take action now and get started. List all of your assets of every kind. List all of your anticipated income from all sources. Assemble all of your day to day budgeted expenses and finally include any special expenses you may have. This includes major repairs to the house, a new car, travel, and also health-related issues.

Once you have this information together, talk to a financial adviser. Speak to one, who is willing to help you answer the questions you have. Of course, in return, he or she is going to want you to place your investments with him. This is ok, provided you are getting the assistance you need. Any adviser who is only interested in helping you with investments is not really an adviser. Instead, they are only interested in how much money they can make and not really helping you!

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Living Pay Check To Pay Check

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Living Pay Check To Pay CheckLiving pay check to  pay check is something that many people do all over the US and Canada, as well as around the world. We normally talk about retirement planning and getting ready for retirement, however we felt that this topic was so important that we wanted to post it here on this website. If you can get your monthly budget under control and develop some savings, you will be at far less risk of losing your home as well as being ready to retire when the time comes. Saving money around the home will make it much easier to survive a job loss and other major expenses that you have not planned for.

The following survey is a sad picture of Canadian savings habits. It also high lights the exposure that over 60% of Canadians have to lose their homes, cars and more if they were to lose their jobs. We suspect that Americans are in the same position. The blunt advice that these people need to follow is :

  • Save 10% of your paycheck every month
  • Have 3 months salary in  savings available if you should lose your job
  • Get your budget under control and learn to live with less money so you can prepare for the future.

Living Pay Check To Pay Check – Survey

The results of the survey follow and it is a sobering message for many Canadians.Almost 60 per cent of Canadians live pay check to pay check and say they’d be in financial difficulty if their pay check was a week late.

A new survey from the Canadian Payroll Association released Monday showed some troubling signs about Canadians’ personal finances.

The 59 per cent figure is the same rate as the one found in last year’s survey. It is the second year that the agency has undertaken the payroll survey.

Almost half of respondents to a national survey said they are saving five per cent or less of their income. Financial planning experts generally recommend a retirement savings rate of about 10 per cent of net pay. Also save  three months’ worth of expenses in an emergency fund.

Although they don’t appear to be having much success doing so, 60 per cent of respondents said they were trying to save more money than they used to. The remaining 40 per cent said they were not trying to save any money at all.

“The most significant result of Canadians continuing to live pay check to pay check  is its impact on their concerns about personal finances and retirement.

Younger workers feel especially vulnerable. 65 per cent of respondents aged 18 to 35 saying they would find it difficult to make ends meet if they missed a single pay check.

More than two thirds (69 per cent) of respondents said it would be difficult to find comparable employment with a similar salary if they lost their job.

For the survey, the agency interviewed 2,766 Canadian employees across the country. The survey is considered to be accurate within 1.86 per cent, 19 times out of 20.

It was taken between June of 2009 and July of 2010.

“End of Survey”

In case US citizens are reading this and feel that they may be better off than Canadians, think again. You have just gone through and are beginning to come out of a major recession which Canada pretty much avoided. You need to adopt these savings approaches even more than Canadians. Jobs are more difficult to come by in the US than they are in Canada.

In fact emergency savings are probably the single most important thing to think about. This is next to putting food on the table and paying for somewhere to live. Invest wisely and conservatively.  If you are able to save a lot of money, diversify and avoid the get rich quick schemes. Only a few people succeed at this approach and most just end up losing their hard earned savings. Hire a competent financial manager, but always do your own research and make your own decisions.