Retirement Savings Account

Your retirement savings account may have been what you hoped would provide the retirement you dreamed about.  The first upsetting factor may be a good news / bad news issue.  You will probably live longer than your parents lived and than you may have envisaged.  Yet you are in great health and feel you can go on for ever.

The second factor has affected a large number of retirees and that is the major recession that is now easing but leaving many funds in much poorer shape than they were before.  For either or both reasons you may find that you are short on retirement funds.  Here is what Rob Carrick recommends.  Don’t panic:  it’s a time for some strategic thinking.

Anxiety about not having enough put away for retirement is rampant in this country. Fortunately, there are solutions. If you simply can’t contribute more to your retirement savings plan, you can work longer. You can also try ramping up the risk level in your retirement portfolio to achieve higher returns, and scaling back your retirement lifestyle aspirations to comfortable but not extravagant levels.

If you feel that it is only you that is affected by this, then consider a recent survey commissioned by BNN, CTV and Standard Life.  They found that:

• only 35 per cent of participants are confident of having enough money to live on in retirement
• 41 per cent have enough to live on, although their standard of living may decline or they will have to continue working
• 16 per cent said they will have to rely on the Canada Pension Plan and Old Age Security to supplement their savings, and
• 8 per cent said they will not be able to afford retirement at age 65.

Given this, many are considering working in their retirement years and thus extending their retirement savings.

If you have strong nerves then ramping up the risk level in your portfolio with more exposure to the stock market is an option to consider.  However it is a tricky way for beefing up your retirement savings, so approach it with caution.

The safest way of addressing your concerns about a retirement savings shortfall is to scale back your lifestyle aspirations for your senior years. It will be something like the economizing that’s necessary when you’re raising children and carrying a mortgage. And for your leisure time, develop affordable hobbies.