Morneau Shepell's Chief Actuary analyzes vital questions on retirement planning and debunks standard financial advice in The Essential Retirement Guide: A Contrarian's Perspective
TORONTO, Dec. 2, 2015 /CNW/ - As the average life expectancy climbs, more people are looking for advice on what is required during their working years in order to have enough saved for a comfortable retirement. In a new book called, The Essential Retirement Guide: A Contrarian's Perspective, Frederick Vettese, Chief Actuary of Morneau Shepell, explains the various factors that affect retirement savings and provides a modernized view for financial planning.
In his analysis of the fundamental questions around retirement planning, Vettese explains how to strike a balance between apathy and anxiety.
"Many financial advisers recommend saving 70 per cent of final employment earnings for retirement but this is no longer a realistic goal," said Vettese. "Previous generations worked four or five years for every year they spent in retirement. Because most people now work just 1.5 years or less for every year in retirement, saving 70 per cent of one's income for retirement is no longer possible, much less necessary. As such, we need to readjust the way we look at retirement planning."
Some other key findings from The Essential Retirement Guide: A Contrarian's Perspective include:
- Saving 10 per cent a year is not a bad rule of thumb if you can follow it, but there will be times when you cannot do so and it might not even be advisable to try;
- Even in this low-interest environment, you can withdraw five per cent or more of your retirement savings each year in retirement without running out of money;
- Interest rates will almost certainly stay low for the next 20 years, which means you will need to save more or retire later;
- On the other hand, your spending in retirement will almost certainly decline by a certain age so you may not need to save quite as much as you think;
- As people reach the later stages of their lives, they become less capable of managing their finances, even though they grow more confident of their ability to do so. One should plan for this stage before it is too late; and
- Annuities have become very expensive, but they still make sense for a host of reasons.
"There are many factors to consider when planning for retirement, including interest rates and inflation, the possibility of paying for long-term care, and assessing the risk of critical illness or death," said Vettese. "Though it is important to plan for the future, we cannot predict what will occur. Rather than worrying unduly about what might become of our lives, we should strive to live in the present."
Frederick Vettese is Chief Actuary of Morneau Shepell. He is an expert on Canada's retirement income system and is a frequent contributor and speaker, appearing in more industry-related forums and the general broadcast media including the National Post, Globe and Mail and CBC radio. In 2012, Vettese and former Morneau Shepell Executive Chair Bill Morneau co-authored The Real Retirement, an in-depth analysis of Canada's retirement system.
The Essential Retirement Guide: A Contrarian's Perspective, ISBN: 978-1-119-11112-2/288 pages, is available for purchase on Amazon, and wherever books and ebooks are sold.
About Morneau Shepell Inc.
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits, and retirement needs. The Company is the leading provider of Employee and Family Assistance Programs, the largest administrator of pension and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell Inc.