According to a recent survey by the Bank of Montreal, many Canadians expect their retirement to be funded by the Canada Pension Plan (CPP), inherited wealth and/or lottery winnings, rather than personal savings. Approximately 90% of those interviewed expressed that they expected the CPP to cover post-retirement living expenses, despite an average monthly payment of less than six hundred dollars. Over 30% of interviewees are planning to retire with CPP payments as their only source of financial support.
34% of individuals surveyed said that they hoped to win the lottery. The prospect of living off of lottery winnings is bleak, with the probability of winning at approximately one in fourteen million.
Another 40% of aging Canadians reported that they were reliant on an expected inheritance. Relying on an inheritance as a source of income and financial stability into the later years of life may be more realistic than the expectation of winning the lottery, but remains an unnecessary risk. An anticipated estate beneficiary can be written out of a will and bequests may be subject to unforeseen estate liabilities and dependant support claims.
Canadians who struggle to make ends meet after retirement will not find support in the Federal Budget released last week. The budget makes no mention of assistance for Canada’s aging population. After a two year delay in the eligibility for Old Age Security last year (which now begins at age 67), a popular proposed increase to the CPP has not yet been implemented. Further, Canada remains the only G7 country without a national housing policy to benefit seniors and younger Canadians alike.
Aging Canadians who hope to live comfortably into retirement should consider using Registered Retirement Savings Plans, Tax-Free Savings Accounts and other mechanisms that may be available to enhance their personal savings and fund the later years of life.
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