A new CIBC report paints a grim picture for the future of MANY working age Canadians saying that about 5.8 million of us can expect to see a 20 per cent drop in our living standards after we retire.
It is interesting to note that the report shows a clear difference along generational lines as many Canadians who are approaching 65 are on a path to the “retirement of their dreams,” while those who are younger and in middle-income brackets could see just the opposite.
The study, which takes in account a typical drop in expenses in a person’s retirement years, says that a typical 70-year-old today has enough income to maintain their pre-retirement standard living, thanks to government programs — such as CPP, OAS and GIS — pension plans and other savings accumulated in RRSP’s.
Essentially this means that those born during the (Second World War) are positioned to maintain virtually all of their pre-retirement consumption patterns and Baby boomers — born between 1945 and 1954 — are “only slightly less advantaged.” But it is Generation X and Millennials who are expected to see the most significant drop in their standard of living during their retirement.
Current trends of saving less than the generations before and reduced private pension coverage puts Canadians born in the 1980s on track to earn only 70 per cent of their pre-retirement income.
Really, the numbers indicate at best, it is time for a wake-up call for many of us say financial experts, and the time to act is NOW about rethinking retirement goals.
It is ironic that at the same time these results come out that recently debate was sparked with Finance Minister Joe Oliver’s announcement last week that the government would consider expanding voluntary Canadian Pension Plan contributions. Is this the answer that will force Canadians to get their finances on the right track…especially if contributions became mandatory?
And then there is the old argument that living for today rather than a future that never may be makes little sense.
Either way, the numbers speak loudly that Canadians for whatever reason have put planning for the future far behind their proprities than the generations before them.
What do you think? Will your retirement years look great or gloomy and why have we changed our outlook about retirement so drastically especially when our lifespan is longer than ever?
SOURCE: Canadian Business News Network, CIBC.