Fidelity Investment's Peter Drake urges Canadians to see beyond the
headlines and introduces the Top 10 reasons why Canada is a great place
VANCOUVER, May 28, 2012 /CNW/ - Addressing the Canadian Institute of
Financial Planners annual national conference today in Vancouver,
Fidelity Investment's Peter Drake highlighted the disconnect many
Canadians may be feeling about their retirement prospects given the
almost constant barrage of negative economic and business news
In his presentation to attendees, entitled The Shift to Retirement Income: Beyond the Headlines, Drake, who is Fidelity's Vice President of Retirement and Economic
Research, urged financial advisors and their clients to put the
negative news in context and not become paralyzed with fear. The
presentation focused on the positive role financial advisors can play
in helping investors focus on what they want to achieve in retirement
so that they can properly plan and emotionally prepare for this life
"Everywhere you turn these days, you can find headlines about the
slowing global economy, the need to work longer, underfunded pensions
and how Canadians are not saving enough for retirement. While there may
be truth in these views, they often sensationalize the actual
situation," said Drake. "What we don't read enough of is that Canada is
one of the best places in the world to retire. Look at our solid
economic position, our healthcare system and the demand for older
workers. There's little doubt that Canada is attractive for both people
retiring as well as those who want to work past the traditional
Top 10 reasons why Canada is a great place to retire
To balance concerns Canadians may be seeing and hearing about the state
of retirement in Canada, Fidelity introduces the Top 10 reasons this
country provides many truly great retirement opportunities:
Canada's labour market provides opportunities for older Canadians: The participation rate of older workers in Canada is on the rise and
Fidelity's research found that 79% of pre-retirees expect to work at
least part-time in retirement. Contrary to what one might expect, their
reasons for working in retirement are not purely financial. Top reasons
included the desire to stay mentally or physically active and keeping
busy to help pass the time. On the demand side of the equation,
employers are increasingly looking to older workers to provide much
needed experience as the number of new entrants to the workforce slows.
A combination of both growing supply and demand for older workers
forecasts a positive outlook for Canadians in the years ahead.
Rising Canadian housing prices have added wealth for boomers: The net worth of Canadians has increased substantially as Canada's
housing market took off over the past decade. While there may be
concerns about overheating in some urban markets, it is likely that
most retirees and near retirees who purchased homes in the prime of
their accumulation years, could weather a housing correction and still
have added value that could be used to generate income in retirement if
Canada's fiscal position in good standing relative to other countries: The Canadian government's deficit and debt position is in good shape
relative to much of the developed world. For Canadians, this strong
fiscal standing helps ensure the sustainability of the types of
retirement benefits Canadians rely on for the foreseeable future.
Workplace pension coverage likely to improve: While there are ongoing discussions about which route governments should
take to improve employee pension coverage including adopting Pooled
Registered Pension Plans or enhancing the Canada Pension Plan, it is
positive that the federal and provincial governments are actively
looking for ways to help Canadians better prepare for retirement.
Low and predictable inflation: The strong record of the Bank of Canada of keeping inflation low and
predictable is very positive for retirees. Inflation affects retirees
more than any other demographic group as it can reduce the purchasing
power of their savings. Inflation that is both low and predictable is
one of the most important aspects to planning for twenty to thirty
years of retirement.
Flexibility in Canada's retirement system for saving, investing and
generating income: Canada has a flexible retirement income system. There is more than one
way to save and invest for retirement and more than one way to generate
retirement income. This means that Canadians have choices about what
works for them.
Health Care - 70/30 rule: 70% of expenses are covered by the government,
30% by the individual: Fidelity research in the United States concluded that Americans should
save $240,000 for health care in retirement1 - a cost most Canadians won't have to face. While everyone in Canada is
covered for basic health care expenses, Canadians do need to be aware
of what they are covered for and plan for potential out-of-pocket
health costs. The good news is that it is unlikely that Canadians will
be hit with an unexpected, catastrophic medical bill.
Sustainability of Canada's Public Pension system: The federal government's actuary regularly checks the health of the
Canada Pension Plan (CPP) and it has been declared solvent to pay all
its liabilities for at least the next 75 years.
Canadian life expectancy among highest in the world: Canadians are living longer, healthier and more active lives than ever
before. Retirements of 25 plus years are now the norm, not the
exception. To enjoy this gift of time, Canadians need a written
retirement plan to help ensure they do not outlive their savings.
Fidelity's research shows that only 23% of respondents have a written
retirement income plan, a number that hasn't changed in the seven years
of Fidelity conducting research in Canada. This number needs to
Canada is a great place to live: Canada is recognized globally as one of the best countries in the world
to live. From stable governments, to strong individual rights,
accessible health care, and abundant resources from clean water to
commodities envied by the rest of the world, Canada has enormous wealth
and the ability to provide for its citizens. With proper planning,
retirees can live the lifestyle they plan for filled with
Drake concluded by reiterating the importance of having a retirement
plan. "There's always a reason not to plan for retirement," said Drake.
"Investors could pick any year from the 1987 crash to the tech bubble
to the recent financial crisis and ongoing market volatility - there
will always be something to focus on versus thinking about retirement
planning. We know from our research that Canadians who have taken the
time needed to prepare for their retirement are feeling good about
their future. While the news of the day might be daunting, you have a
better chance of living the life you want in retirement if you take the
time now to plan, save and invest for your future. And you'd be smart
to get professional financial advice."
About Fidelity Investments
Fidelity Investments Canada ULC is part of the Fidelity Investments
organization of Boston, one of the world's largest providers of
financial services. 2012 marks 25 years of success in the Canadian
marketplace, where Fidelity manages a total of $67 billion in mutual
fund and institutional assets. This includes $13 billion in assets for
institutional clients including public and corporate defined benefit
pension plans, endowments, foundations and other corporate assets on
behalf of clients across Canada.
Fidelity Canada provides Canadian investors a full range of domestic,
international and income oriented mutual funds, as well as asset
allocation and managed solutions and the high net-worth program, the
Fidelity Private Investment Program. Fidelity funds are available
through a number of advice-based distribution channels including
financial planners, investment dealers, banks, and insurance companies.
Fidelity is a proud supporter of the Boys and Girls Clubs of Canada and
we are dedicated to helping young Canadians realize their full
potential as productive, responsible and caring citizens.
1 Fidelity Investments, Fidelity Viewpoints, May 16, 2012, "Retirees
face estimated $240,000 in medical costs". The estimate assumes no
employer-provided retiree health care coverage and average life
expectancies after age 65 of 17 years for men and 20 years for women.
The estimates of retiree health care costs will vary considerably,
based on mortality assumptions.
SOURCE Fidelity Investments Canada Limited
For further information:
Vice President, Corporate Affairs