The Coming Retirement Storm – 9 Million Retiring Canadian Baby Boomers

Baby Boomers retire in Canada
With the current economic situation in the United States which has somewhat spilled over into Canada, it would seem that most Canadian’s that are close to retirement are destined to work well into old age because they have not saved enough or are burdened heavily by debt.

A Canadian Imperial Bank of Commerce poll this week showed that only half of Canadian Boomers aged 45 to 64 have some type of regular savings programs in place. And a TD Waterhouse survey found 31% of retirees aged 55 to 70 are spending more in retirement than expected.

Those people aged 55 to 70 who have not saved or have company pensions will be destined to work at least until the traditional retirement age of 65 and many may work until 70. By waiting the extra five years, annual benefits paid out by the Canada Pension Plan will be 42% higher.

Over the next 20 to 30 years, Canadian pension plan will deal with a wave of an aging population with longer life spans. This will be taxing on the Canadian pension system going forward and unfortunately many coming retiring Boomers have failed to prepare for the coming wave of demographics, debt and deficit. The next decade will be an extended period of lower economic return and this will affect all retirees.

The height of the retirement cycle in the United States will be 2025, at this point there will be 10 new retirees for each new entrant to the workforce. In 1970, the ratio was closer to 5 to 1.

Fortunately for Canada we dodged the 2008-2009 financial crisis and thank goodness the Canada Pension Plan (CPP) was put on a firm footing in the 1990s. While partly pay-as-you-go, CPP is strong enough that the NDP and the Liberal Party both advocated expanding it.

Unfortunately though the Conservative party is not in favor of maintaining the CPP and may caused problems for future retirees. This should be taken very seriously, as they can make things as bad as the United States going forward.

The Conservatives prefer a private-sector, market-oriented defined-contribution pension model that will be managed by the nation’s banks, fund companies and insurance companies. It’s called pooled retirement pension plan, or PRPP. The Harper administration has plenty of time to implement this program and prove it’s serious about closing the retirement income gap.

This transfers the responsibility of the retirement fund from the Canadian government to the corporation and private banks. This is a scary thought, because as we’ve seen from example in the United States , corporations and banks cannot be trusted and they don’t have the peoples interest at heart.

So within the next decade about 30% of Canadians will retire that has huge implications, if you are in your 30’s or 40’s and you are reading this, now is the best time to re-examine your life and plan your career, business and money matters to take advantage of the coming opening job positions and wave of new retiree customers. If you are in your 50’s or 60’s, my recommendations is to pay off as much debt as you can prior to retiring and also put a little more aside…that way you are not burdened once you retire and you can actually enjoy your retirement.

by Das Brain

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