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Almost a third of Canadians approaching retirement have no financial plan


A new report released by RBC Wealth Management, entitled Retiring in Canada, finds that while Canadians are often saving enough for retirement, the lack of a specific financial plan is causing the most uncertainty.

"Everyone has their own goals for retirement, from spending more time with family to buying a vacation property, but we're seeing a gap in their planning to make those goals a reality," says Tony Maiorino, vice-president and head, RBC Wealth Planning Services. "For Canadians approaching retirement it is important to have a practical perspective on their future that focuses on how to achieve their desired lifestyle – rather than simply on what retirement will cost."
From estate planning to sources of retirement income, Retiring in Canada discusses how to customise a proper financial plan to meet your own specific needs and goals. A full financial plan goes well beyond just a savings figure, but takes into account changes in the market, charitable donations, travel plans and future family health to help ensure you can live the life you want after you stop working.
"The Baby Boomers will create a mass exodus from the workforce in the coming years, but they often don't know what they actually need financially," says Maiorino. "However, despite these concerns, we have found that retirement funds either went further than expected or that retirees were pleasantly surprised by the adequacy of their retirement income."
The RBC Retirement Myths and Realities Poll suggests much of this disconnect can be attributed to the lack of a financial plan heading into retirement. The poll found that 28 per cent of Canadians approaching retirement had no financial plan. This number decreased to 19 per cent among retirees.
According to the same RBC poll, 91 per cent of retirees were optimistic that their money would last for at least their lifetime. This is compared to 79 per cent of those approaching retirement who held the same view.
This situation can be the result of a number of factors. Many Canadians will be able to live mortgage-free in retirement, while other demands on income may also drop after they stop working, including monthly costs of public transportation, dining out, gasoline, parking expenses and business attire.
There are multiple factors that can influence your approach, including the level of your investment knowledge and how involved you want to be.
For example, if you anticipate a slower pace of life in retirement, you may end up having additional time to review your investments more closely. You may want to participate in investment decisions more actively or, quite the opposite, you may be too busy to keep track of your portfolio performance and would rather leave the decision-making to an investment professional.
The general rule of thumb is that retirement income comes from three areas: government income sources, employer retirement plans or pensions and personal savings, which generally encompasses registered and non-registered savings.
However, in some instances, these sources of income might not provide sufficient coverage during retirement. A financial advisor can help create a plan to help you meet your goals, from income splitting in retirement and maximising government benefits, to other options such as using the equity in your home.

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