Rethinking Retirement



    How the Boomer generation is changing the face of retirement in Canada

    TORONTO, Nov. 6 /CNW Telbec/ - According to a national study published
today by Desjardins Financial Security, the current habits, lifestyles and
attitudes among baby boomers have put the traditional "all play and no work"
retirement mentality on the verge of extinction. One-tenth of today's retirees
continue to work, and over half (54%) of workers aged 40 and older are
planning a gradual retirement.
    The study, which surveyed Canadians from across the country, revealed the
effects of starting work and family life later than previous generations.
    Canadians hoping to retire are coming to terms with the fact that "early"
retirement is not in the cards exactly in the way they had originally
anticipated. When asked about their ideal retirement age, university-educated
workers are more likely to envision working past age 65 - at least five years
longer than the "ideal" retirement age of other actively employed respondents.
    "We know that beginning a family later in life is four times as frequent
today as a generation earlier. We're now supporting dependent children into
our fifties and sixties, making our "ideal" retirement age somewhat of a
moving target," says Monique Tremblay, Senior Vice President, Savings and
Segregated Funds, at Desjardins Financial Security. "The effect of this stress
on financial resources is aggravated by the minimal budgeting and financial
planning during working life."

    Mitigating the risks crucial to retirement planning

    Tremblay goes on to say that the Desjardins survey shows that this
"magical thinking" among Canadian workers may result in unpleasant surprises
in terms of risk management at the time of retirement.
    "Canadians say they are willing to save for the future, but 66 per cent
of respondents have not even considered how they will use those retirement
dollars. If you don't factor inflation into your future, you could be in for
sticker shock when it comes to food, housing and other basic necessities" she
adds.
    Health is another significant risk factor. More than three quarters of
existing Canadian retirees say they are in good, very good or excellent
health. While that may be true today, about half are significantly concerned
that they may need extended care at home or long term care in a facility as
they age. 43% of retirees worry that they may not have the savings to pay
these expenses, which can be quite significant in some cases."
    And yet, the Desjardins survey also finds that Canadians continue to take
a "do-it-yourself" approach to savings and financial planning, not arming
themselves with all the information and knowledgeable assistance they need to
ensure a financially predictable retirement.
    Michael Aziz, Regional Vice President of Sales Investment Products at
Desjardins Financial Security, says "Canadians must take a leadership role in
planning for their own future by equipping themselves with the tools and
access to expertise they need to accomplish this. People need clear
information about how much they will need to cover anticipated expenses, and
what income they can expect to draw from their investments."

    It's not just about saving

    Over 80% of survey respondents anticipate entering their golden years "in
the red". Further, they appear complacent about it! Aziz adds, "The role of
real estate in asset, debt and retirement financing remains quite vague in
their mind."
    According to the study results, only 38 per cent of aspiring and current
retirees are concerned about outliving their savings.
    Unexpected factors - health problems, increasing life expectancy, and
market downturns - can erode savings over the long term.
    "The responses to the questions we asked about life expectancy indicate
that this notion and how to use it in a financial plan remains a mystery to
most respondents", said Tremblay. "It is certainly difficult to budget and
envision scenarios when there's no clear idea of the time horizon over which
you need to allocate your financial resources".

    "There's always tomorrow"

    Tremblay adds, "With life expectancies on the rise, we could quite likely
spend more years in retirement than we did working. We need to develop "saving
behaviours" that ensure we won't have to stay at work or return to work purely
due to financial necessity. We can't predict the future, but a good financial
plan means we will be able to adjust more quickly as events unfold."
    When asked what they would do if they outlived their savings, Canadians
had two equally stated answers: cut expenses significantly, or reduce what
they would leave as inheritance. When asked how they would alleviate
retirement financial woes, 20 per cent would consider government, associations
and charities. Some say they would turn to their families, and even friends,
for support.
    Aziz says, "Most people you know take a lot of time and care planning
their African safari - the cost of airfare, accommodations, entertainment,
itinerary...and they buy travel insurance to make sure they're not stranded or
sick or penniless with no recourse. When it comes to planning for the rest of
our lives, we must pay as much, if not more attention. Seeking assistance does
not mean relinquishing decision-making. It means making decisions in a
well-informed and optimal way, knowing all the options available."
    Tremblay concludes, "Knowing what risks we face as we enter this phase in
our lives is essential to mitigate those risks. Solutions are available to
plan according to our lifestyle and the protection we need. This new reality
means rethinking retirement. Planning starts today, and small steps will take
you a long way."

    Editor's note: Backgrounder about financial planning tips to reduce the
impacts of longevity, health and economic accompanies this news release.
    For more information, please visit: www.rethinkretirement.ca

    About the Survey

    SOM Surveys, Opinion Polls and Marketing conducted the survey on behalf
of Desjardins Financial Security between July 24 and August 31, 2007. In
total, 1,505 interviews were conducted with a representative sample of
Canadian adults. The sampling plan provides proportional estimates with a
maximum margin of error of plus or minus 2.6% at a 95% confidence level 
(19 times out of 20). The data was statistically weighted to accurately
reflect the composition of Canadians by region, gender and age based on
Statistics Canada's 2001 Census information.

    About Desjardins Financial Security

    Desjardins Financial Security, a subsidiary of Desjardins Group, the
largest integrated cooperative financial group in Canada, specializes in group
and individual life and health insurance, and savings products and services.
Every day, over 5 million Canadians rely on Desjardins Financial Security to
ensure their financial security. With a staff of over 3,700 employees,
Desjardins Financial Security manages and administers close to $22 billion in
assets from offices in major cities across the country, including Vancouver,
Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec, Levis, Halifax and 
St. John's.

    BACKGROUNDER

    Financial Planning Tips: Protect Against Risks that can Erode Retirement
    Savings
    By Michael Aziz, MBA, CFA, CFP, BA, Regional Vice President of Sales and
    Savings Products

    The longer each person lives into their "golden" years, the more exposed
they become to various retirement risks (health, longevity and economic risks)
that can rob them of their hard-earned savings; in some cases leaving
individuals in dire straits.

    Retirement risks include:

    
     - Longevity risk: The risk of outliving your savings
     - Health risk: The risk of becoming seriously ill and/or not being able
       take care of oneself; thus requiring nursing care and other medical or
       pharmaceutical care not covered by the provincial government and paid
       out of a person's own pocketbook.
     - Inflationary risk: The actual risk that a person's purchasing power
       will erode over time. As examples, bus ticket costing $2.75 in 2007,
       cost 18 cents 40 years ago. A 25-cent hamburger in 1967 now costs
       $2.30. And, the one pound of butter that today costs $4.19, could be
       purchased for 63 cents 40 years ago. (Source: Statistics Canada, A&W,
       Société de Transport de Montréal)
     - Market risk: Markets move in cycles. During a "Bear" market (when
       returns are low), retirees on a fixed income will likely have to eat
       more into their capital to meet day to day financial obligations..
     - Interest rate risk: High interest rate might be good news or bad news.
       Fluctuations can affect your retirement lifestyle.

    According to Michael Aziz, Regional Vice President of Sales and Savings
Products at Desjardins Financial Security, and a veteran financial advisor,
there are steps every Canadian can take to mitigate retirement risks.

    Tips for retirement planning

    1. Go back to basics

       - Take responsibility for our retirement. Plan, plan, plan!
       - Take the time to figure out where you are now and where you would
         like to be during retirement. What kind of retirement do you want?
         (Think big, but be realistic!)

    2. Take inventory

       - What is the value of your assets?
       - What are your total liabilities?
       - What is your plan to eliminate your liabilities (mortgage and
         consumer debt)?
       - What do you think you will need, in terms of assets and income, to
         have the retirement lifestyle you dream about? Do you need the big
         house, or will a condominium or an apartment suffice? How often do
         you want to travel each year? Be realistic.
       - Write it all down.

    3. Reality check

       - Take your written document to a financial advisor and spend time to
         find out if your retirement dream is achievable.
       - If the dream is unattainable because of current circumstances, ask
         you advisor for solutions to change the situation.
       - Ask your financial advisor about retirement risks. (Tips on how to
         approach the topic of discussion follow).
       - A financial advisor can help anyone plan for retirement and manage
         day to day cash flow, no matter what their current financial picture
         looks like. Protect your savings and achieve your dream!

    Talking about retirement risks with your financial advisor:

    According to Aziz, this can be a difficult conversation for some people.
Most are aware of life insurance. But they may not be aware of financial
solutions to lessen the impact of changes during retirement caused by
longevity, health and economic risks.

    Aziz suggests meeting with an advisor to talk about common retirement
risks. Find out if you are appropriately protected. Some suggested questions:

      1. Does my financial plan make sense?
      2. Am I at risk of outliving my savings? What can I do to rectify this
         situation? Can we design a plan together?
      3. How well protected am I against a "Bear" market (low returns)? What
         solutions are available to me?
      4. How can I help offset the impact of inflation on my retirement
         savings (when I retire/now that I am retired)?
      5. How will interest rate fluctuations impact my retirement savings?
      6. What health considerations do I need to think about as I age? What
         will be the impact of a long-term illness or any other change? Can I
         protect my savings in such a situation?
      7. Do I want to leave any assets to children, loved ones and friends?
         How can I do that?
    

    For more information, please visit: www.rethinkretirement.ca

    About Desjardins Financial Security

    Desjardins Financial Security, a subsidiary of Desjardins Group, the
largest integrated cooperative financial group in Canada, specializes in group
and individual life and health insurance, and savings products and services.
Every day, over 5 million Canadians rely on Desjardins Financial Security to
ensure their financial security. With a staff of over 3,700 employees,
Desjardins Financial Security manages and administers close to $22 billion in
assets from offices in major cities across the country, including Vancouver,
Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec, Levis, Halifax and 
St. John's.




For further information:

For further information: Shannon Bowness, Desjardins Financial Security,
(416) 926-2700, ext. 2015, Shannon.bowness@dfs.ca; Sandra Nunes, Hill &
Knowlton, (416) 413-4611, sandra.nunes@hillandknowlton.ca; Cathy Kurzbock,
Hill & Knowlton, (416) 413-4755, cathy.kurzbock@hillandknowlton.ca


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