- The need for a financial plan also of greater concern
- Concerns about reducing debt in retirement continue to rise
TORONTO, Jan. 30, 2012 /CNW/ - As financial markets continue to challenge investor portfolios, having a reliable source of income in retirement remains a concern for Canadians according to the results of the most recent Russell Financial Health Index (RFHI). In the fourth quarter of 2011, this concern was at the second highest level since the benchmark was established in early 2008, and concerns about having a tangible and realistic financial plan and reducing debt in retirement also increased.
Overall, for the fourth quarter of 2011, the Russell Financial Health Index — an online calculator that gauges the financial health of Canadian investors— was relatively flat at 47.08, down slightly from the previous quarter when it was 47.47, and at the second lowest level since the benchmark was established.
"Considering that the market volatility we experienced in 2011 is expected to stay with us in 2012, it's only natural that Canadian investors continue to be concerned about generating a consistent level of income in their retirement years," said Bob Leeming, Director of Client Solutions, Russell Investments Canada. "Not surprisingly then, the RFHI results also show that Canadians are seeing the increasing importance of having a tangible and realistic financial plan."
Carrying debt into retirement is another area of growing financial concern for Canadians this quarter, increasing steadily over the last year. Numbers released by Statistics Canada last month put household debt levels at 150.8 percent of income.
"We can't control the economy, but we can do something about improving our financial health, and helping to ensure a better financial future," explained Leeming. "Carrying debt into retirement can create cash flow problems, especially if it is variable rate debt, and while this low interest rate environment makes debt more affordable, interest rates can't remain at current levels forever."
Leeming also noted that, "While it can be tempting for people to delay their long-term investment plan, reduce their exposure to potentially risky growth assets or perhaps even flee the market altogether, sound strategies such as reducing debt, combined with implementing a solid financial plan can help Canadians take some of the emotion out of the turmoil created by the financial markets."
About the Russell Financial Health Index
The Russell Financial Health Index gathers its data from a confidential web survey, which takes approximately five minutes to complete. Based on a user's answers, a Financial Health Score is assigned, which can be measured against the scores of other Canadian investors who have used the tool.
Each score is a result of analyzing variables that include physical health, personal finances, unexpected events and financial planning. Respondents are also asked questions related to how prepared they feel to ride out changes in their long term investment performance before and during retirement.
Findings from the Index will be used to assess and report findings, on a quarterly basis, about how Canadians perceive their financial health, as they deal with different economic environments and changes in their lives.
About Russell Investments
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. The firm has C$143.4 billion in assets under management (as of 09/30/11) in its mutual funds, retirement products, and institutional funds.
Russell Canada was recently named the #1 fastest growing money manager in Benefits Canada's 2010 Top 40 Money Managers Report. For more information about how Russell helps to improve financial security for people, visit us at www.russell.com/ca.
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Date of first publication: January 30, 2012
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