Russell Investments and Harris/Decima Retirement Research Highlights
- 63% of Canadians surveyed have remained confident during the economic
- 78% still expect to retire at or before 65 years of age.
- 94% maintained their investments or increased their portfolio
holdings in volatile markets.
TORONTO, March 15 /CNW/ - Most Canadians are unaware of how much income potential their retirement portfolio can generate.
A recent poll by Russell Investments Canada Limited and Harris/Decima of investors aged 42 years and over, with a household income of $50,000 or more, revealed that 88% of investors don't know that the bulk of their investment income in retirement can be generated from growth that occurs during retirement.
"Many Canadians still believe that once they retire, their investments retire as well. But by working with an advisor and investing in retirement solutions that can continue to grow during retirement, investors can feel assured knowing that close to 60% of retirement income can be generated during retirement," says Fred Pinto, Managing Director of Distribution Services at Russell Investments Canada Limited.
Pinto helped develop a previous Russell retirement report, entitled: "The Russell 10/30/60 Retirement Rule". The Rule concludes that investment earnings during retirement could come from 10% initial savings during the working years, 30% pre-retirement investment growth, and as much as 60% from growth after retirement - this all depends on having the right asset mix of bonds and equities.
Canadians underestimate investment growth during retirement
The retirement report also discovered that investors believe that 49% of their retirement income will come from money saved during their working years. Meanwhile, investors think the growth of their pre-retirement savings will provide for 31% of their spending in their golden years. Investors thought that investments will only account for 20% of their potential income during retirement.
"If investors continue to underestimate the need for investment growth during retirement, they could become too conservative with their investments and potentially miss out on generating that very important 60% of their investment income during retirement," explains Pinto.
"That's why it is important to remain invested in some allocation to equities during your retirement years. You need to continue to grow your portfolio to protect against inflation and rising costs such as health care. Remember, it's not the end of the investment journey when you retire."
Most Canadians remain confident about their retirement plans.
Despite greater market and economic volatility recently, only 37% of Canadians report some loss of confidence in their retirement finances. In comparison, 53% of Canadians surveyed say their confidence level has not been impacted and 10% are even more confident that they'll have enough in retirement.
Just as telling, 29% of pre-retirees still plan to retire at 65 years of age, while 49% expect to retire before age 65. Only 22% of those surveyed expect to retire after age 65.
Most left their investments unchanged in volatile markets
Throughout the recent market downturn, a remarkable 78% of Canadian investors have kept their investments unchanged as they wait for economic improvements to take hold. Another 16% have taken advantage of market volatility to increased their investments and seize new opportunities. A mere 7% sold their investments and retreated from uncertain markets.
"Retirement remains at the forefront of many Canadians' minds, especially in light of the market events that we've experience over the past two years," says Pinto.
"Russell continues to stand behind our advice to investors: Don't retire from investing. Invest for retirement. We also will continue to provide retirement knowledge and research in an effort to help Canadians take action and start planning for a financially healthy retirement with the help of a financial advisor."
To get access to more of Russell's retirement research report, visit: www.myfinanciallyhealthyretirement.com
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisers and individuals in more than 40 countries. Over the course of its history, Russell's innovations have come to define many of the practices that are standard in the investment world today, and have earned the company a reputation for excellence and leadership.
Through a unique combination of wide-ranging and inter-linked businesses, Russell delivers financial products, services and advice. A pioneer, Russell began its strategic pension fund consulting business in 1969 and today is trusted by many well-known worldwide institutions for investment advice. The firm has approximately $184.9 billion CDN in assets under management (as at 31/12/09) in its investment funds, retirement products and institutional funds, and is well recognized for its depth of research and quality of manager selection.
Russell Investments Canada Limited is a wholly-owned subsidiary of Frank Russell Company. For more information, please go to www.russell.com/ca.
SOURCE Russell Investments Canada Limited
For further information: For further information: Thien Huynh, (416) 640-2529; Katita Stark, (416) 929-9100