The changing retirement income landscape


Fewer than one in three working Canadians has a guaranteed pension plan¹. Canadians are living longer than ever before and very few have access to traditional sources of retirement income, such as workplace pension plans. In fact, between 1982 and 2011 participation in defined contribution plans grew by 294.4 per cent while participating in defined benefit plans grew by only 2.7 per cent2.

While defined contribution plans will potentially offer employees more choice, and more control for their retirement income by allowing them to invest their funds as they choose, they do not provide employees with a guaranteed income in retirement. This can make it difficult for people to accurately plan for how much they will earn in retirement, creating a significant challenge when it comes to retirement planning.

Fortunately, your financial professional can help. According to the Towers Watson 2012 Survey of Pension Risk, 72 per cent of Canadian employees either agreed or strongly agreed that they are more concerned about pensions than they were 24 months ago. As part of your retirement income plan, you may wish to work with your financial professional to look at your guaranteed income from all sources and identify any gaps between the money you’ll have coming in and the income you’ll need.

Areas to discuss:

• Your level of guaranteed income
• How much you plan to spend
• Recommended income solutions that will provide income for life, plus the potential for growth

Planning for a retirement does not need to be a daunting task, especially if you take time to ensure you are considering as many scenarios as possible.

1 Source: Statistics Canada, Pension Plans in Canada and Labour Force Survey, 2011
2Source: Towers Watson, Survey of Pension Risk, 2012