Canada’s baby boomers don’t have as much saved for retirement as they think they need.
A BMO Wealth Institute study finds that boomers anticipate they will each require $658,000, on average, to feel financially secure. However, they’ve saved only an average of $228,000, a difference of $430,000.
Forty-six percent of boomers aren’t confident that they’ll be financially secure in retirement, up from 20% 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,” says Chris Buttigieg, BMO Financial Group’s senior manager, wealth planning strategy.
In 2009, Statistics Canada found that the average senior couple spent $54,100. He adds that, based on historical returns and a withdrawal rate of 4%, retirement savings should be about 25 times the size of annual withdrawals.
Read: Retirement confidence starts at $500,000
To generate that $54,100 in retirement income annually, a retired couple would need to have saved about $1.35 million.
The report also finds that to make up for their lack of retirement savings, boomers are looking at other ways to cover the shortfall.
Seventy-one percent plan to take on a part-time job to earn extra money, 44% will sell off collectibles or other possessions they don’t use, 32% expect to sell their home, and 19% will rent out part of their home.
“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,” says Buttigieg.
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