Retirement » Retirement Income

Are you concerned about your retirement shortfall?

Are you part of the Boomer generation aged 50 to 59? If so how is retirement looking for you?

Remember in the 1980s and early 1990’s the media was full of articles about our future work world; short work weeks with many working from home and everyone would retire early! Do you sometimes wonder what happened to that picture of the idyllic life with all that free relaxation time and money spilling over in our RSP’s and saving accounts?

The average age this group now plans to retire at is 63, not bad. The problem is nearly half this group said they have less than $100,000 saved for retirement! That’s a significant retirement shortfall. Now, more than half plan to work part-time in order to bridge their retirement income gap.

Related article: How to save for retirement?

Retirement paycheques

Multiple sources of income are the new retirement plan. It’s all about getting as many paycheques as possible: CPP, OAS, company pensions, investments (RRSP and open accounts), TFSA‘s and many plan to work for a little extra money. If the statistics are correct; the total savings to provide for retirement income are $100,000. The most you can usually average from a guaranteed stream of income is 4%. That is $4000 per year or $320 per month. The average CPP payout is just over $800 per month and OAS is $400 for a total of $1200 per month from government benefits. If you are in the 50 to 60% group that is married or with a partner the combined income is close to what you could reasonably live on. You may not be so fortunate if you are in the 40% + of single people; as that is not even close to what you would need to live on. Add up basic living costs such as food, gas, utilities, rent or homeowners taxes and repairs, condo fees; if you choose that route, medical and dental. Travel or entertainment in retirement would be out of the picture! Working part-time has become essential for many couples and singles in retirement. Many people may have to work into their 70’s! Some call that Freedom 75.

Related article: Seven paycheques of retirement

Working in retirement is the new normal

Many people pick up part-time employment, I have met retirees that drive shuttles for car dealerships or take up part-time sales. I have also talked to quite a few who have decided the only way they can retire is to downsize or sell their homes and purchase a trailer or RV and live somewhere south in winter. Another popular option is moving to countries such as Mexico or Costa Rica where the cost of living is much lower. Some move to warmer climates and work in the tourism industry there.

Related article: Are you planning to work in retirement?

Are you protected from financial curveballs?

Life plans do not always pan out, markets drop just as retirement was planned, real estate crashes and the cash flows from these may reduce or maybe you even lose some of the real estates. Unexpected illness, job losses, so many things have affected the generations that are near or at retirement. Too good to be true unregulated investments have also affected many retirement plans. The money is either locked in them or worse yet, lost completely.

Related article: Are you protected from financial disaster?

Retirement planning is key

It is a good idea to plan out ahead of time where you will be getting your streams of income from and if there is a shortfall that you may be able to do. Choose wisely and diversify into different areas as you build up your portfolio. If you have all your assets in real estate begin to plan for some more liquid investments such as stocks, bonds, mutual funds, annuities, variable annuities, high daily interest accounts, GIC’s. There are many options that will give you a guaranteed income stream to choose from. It will not be that 10 or 20% income but it will be there when you need it.

Related article: Not all advisors understand investing for income

Getting help

Only 47% of Canadians have seen a financial advisor. Many people I have spoken to over the years feel they can’t see an advisor because they have too much debt and don’t have enough free cash to invest. Do go see someone even if you think you can’t invest, they may be able to help find a way for you to get started on a savings plan. Often it is a matter of rearranging some of your spendings, reorganizing your debts, changing the types of insurances you have. It is nice to be doing something in retirement, however, it is much more enjoyable if you don’t have to work to bridge the income gap. Any day is a good day to begin to plan no matter what age you are.


  1. Jim Yih

    Hey Cathy

    Just being picky here but the CPP and OAS figures are slightly off. According to Service Canada, the average CPP payout as of July 2012 is $529.09 and the average OAS is $514.74.

    It does not really change your point but I thought I would share the correct numbers with everyone.


  2. Cathy

    Thanks Jim I did not have a new updated CPP guide the point this makes is the average CPP has been getting lower and lower since I have been working in Financial services! Thanks for the information.

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