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Why We May not Be So Bad Off in Retirement After All

20 January 2013

There’s been a lot of concern – especially among those just a generation or so younger than Baby Boomers – about retirement. With new Old Age Security requirements, we’ll be working longer; and speaking of those Boomers, the government may not have enough left after their retirement years to support those younger generations. Never mind that our household debt levels are at all-time highs and being a millionaire by the age of retirement is no longer a reality for most.

But wait. Before people start pounding nails into their own coffins and seeing nothing but dark clouds laying ahead, two financial gurus suggest that we take a moment to put things into perspective. And that maybe, just maybe, the retirement years for Boomers and everyone else will be just fine – whether or not we panic about it.

Those gurus are Fred Vettese and Bill Morneau, who not only founded their own actuary firm but also co-wrote The Real Retirement. Inside, they delver into what retirement is really like, and why we shouldn’t be concerned that we won’t be living in mansions – complete with gold floors and all.

One of the first of their several reasons of why we should not panic about our retirement is that the rate of seniors living in poverty is lowest in Canada when compared with other developed nations. And while we may all fret that seniors today are living dime-to-dime, whittling their pension down to nothing by the end of the month, that’s simply not true, they say. In fact, according to these two, seniors today are saving about 18 per cent of their pension every month.

And are you really worried that all those Boomers are going to suck the well dry, leaving nothing for younger generations? Currently, Canada is one of the best countries to be in if you’re a senior and has one of the most stable pension systems, also when compared with other developed countries. In fact, CPP has enough funds to carry itself through the next 75 years. And by that time, we most likely will have new funds for the generations behind all of us.

But there is still that nagging fact that whether we like it or not, we’re going to have to work longer – or at least wait longer to receive their OAS benefits. But Vettese says that’s okay, and we’ll think so too when the time comes. He points to the fact that many people are often shocked into retirement, suddenly finding themselves without anything to do, and not knowing how to fill the minutes once they enter their golden years. While Vettese does admit that our funds will be lower because that work will most likely be part-time, we will still be able to make ends meet – and may even be happier for it.

He also believes that part-time work will be okay, because we won’t need as much as we think we do in order to live. He pushes aside the notion that you need to have 70 per cent of your current income, saying that 50 per cent is a more realistic number. We simply don’t have the same lifestyle when we’re older, and we don’t need money for nearly as many things as we do now.

And Vettese says that he’s a living example of the trend to come.

“I’m making a lot less, but I’m happy. I feel engaged and I”m making a contribution,” he says. “I have more time for the things I didn’t when I was working full-time.”

And he says, that’s something everyone can learn from now. With so much reason to be optimistic when thinking about our retirement years, we shouldn’t get so caught up in the stress of planning for those years that we miss out on what’s happening right now – retirement planning aside.

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