pension funds Archives - Ira SmithTrustee & Receiver Inc.

Baby Boomers in Canada: Introduction

Baby Boomers in Canada are not retiring like the generations before them. As we discussed in a recent blog, there are many good reasons to keep working beyond age 65. Although Baby Boomers are the generation that has already reached aged retirement age or are fast approaching it (Baby Boomers are born from 1946 – 1965), many of them are not financially able to retire.

Baby Boomers in Canada: Franklin Templeton Investments Canada study

According to a study conducted for Franklin Templeton Investments Canada:

20% of Baby Boomers have saved nothing for retirement
30% of Baby Boomers are paying off debt instead of saving for retirement
More than 33% of Baby Boomers worked past the age of 65 because they didn’t have enough money to retire
75% of pre-retiree Baby Boomers surveyed said they felt anxious or stressed about their retirement savings or investments
40% said they expected to rely on a government pension as their primary or secondary source of income
50% who had already retired said their government pension was their primary or secondary source of income

Baby Boomers in Canada: Canada Pension Plan (CPP)

There is good news for Baby Boomers relying on government pensions. According to the Government of Canada, up until 2019, the CPP retirement pension replaces one-quarter of your average work earnings. This average is based on your work earnings, up to a maximum earnings limit each year. Other sources of income—such as the Old Age Security program, workplace pensions, and private savings—make up the rest of your retirement income.

Beginning in 2019, the CPP will begin to grow to replace one-third of your average work earnings. The maximum limit used to determine your average work earnings will also gradually increase by 14% by 2025.

As a result, pension amounts will increase by more than 33%. Your pension will increase based on how much and for how long you contribute to the enhanced CPP. You will get the full increase if you contribute to the enhanced CPP for 40 years.

The enhancement also applies to the CPP post-retirement benefit. If you are receiving the CPP (or QPP) retirement pension and you continue to work and make CPP contributions in 2019 or later, your post-retirement benefits will be larger.

Baby Boomers in Canada: Many just want to work

In addition to the financial benefits, many Canadians prefer to keep working beyond the retirement age. Work provides a sense of accomplishment, a social environment, keeps the mind sharp and the body active.

Baby Boomers in Canada: Are you a Baby Boomer who’s still paying off debt?

However, if you’re one of the Baby Boomers who’s still deep in debt, you need professional help now. Although your situation may feel hopeless, there are solutions to every problem with immediate action and the right plan.

Ira Smith Trustee & Receiver Inc. has helped many people just like you throughout the GTA. We can help you get back on your feet and give you back peace of mind. Give us a call today and Starting Over, Starting Now you can put your struggles behind you.

Fully fund your retirement: Introduction

To fully fund your retirement, you need to start early. Canadians are just not facing that reality. According to HSBC Bank Canada almost half of working-age people in Canada are not currently saving for retirement. And, they’re twice as likely to consider selling their homes to fully fund their retirement compared to those who have been diligent about their retirement savings plans. Perhaps you are one of the smart and lucky ones who have including seeking the advice of one of the many retirement planning experts.

Fully fund your retirement: Are you counting on your house to?

A recent HSBC survey found that:

20% of pre-retirees in Canada plan to downsize or sell their primary and secondary residence to fund their retirement.

Only 5% of current retirees will sell their house to fund their retirement.

At age 25-29, a group with low home ownership levels, only 12% expect their property will fund their retirement.

In their 40s, 20% expect their property will fund their retirement.

In their 50s, 26% expect their property will fund their retirement.

In their 60s, 31% expect their property will fund their retirement.

Fully fund your retirement: Needs are changing

There is certainly a dramatic shift in people’s views on pension funds, retirement funds needed, retirement strategy and certainly speaks to the lack of retirement planning, saving and the fully funded pension plan.

It seems that as Canadians approach retirement age, selling their house is the only retirement finance option available to them. The problem with this scenario is that it assumes that the house is sold and very sensibly the couple or individual will downsize their lifestyle and put their budget on a diet so that they can live off the proceeds of the sale of the house.

The reality is that if they haven’t:

clearly calculated the retirement funds needed for the lifestyle they wish to have;

saved for retirement (including considering the impact of tax on retirement funds); and

have not already downsized their lifestyle in preparation for retirement

they may blow through the proceeds of the house and be worse off than they were before.

Fully fund your retirement: What to do if your financial concerns prevent you from doing so

If you’re a pre-retiree with financial concerns seek the counsel of a professional trustee before retirement. We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health in retirement. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.