Baby boomers across Canada have an average shortfall of $430,000 when it comes to their retirement savings, according to BMO Wealth Institute data released August 28.
The study found that boomers – defined as those born between 1945 and 1964 – feel they need, on average, $658,000 set aside for their retirements. However, the amount they have actually saved averages around $228,000.
“As Canada’s baby boomers prepare to head into their retirement years, many are discovering they don’t have the funds they had hoped would be available and now face the reality that they have little time to play catch-up,” said Chris Buttigieg, senior manager, wealth planning strategy at BMO Financial Group.
BMO said that according to Statistics Canada, the average senior couple in Canada spent $54,100 in 2009. Buttigieg said that retirement nest eggs should be approximately 25 times the desired annual retirement income. Based on historical returns, this means the couple would need to have saved over $1.32 million to have this income.
The study also found that most baby boomers want to retire at 59 but anticipate working until they are 63.
Boomers plan to make up for their lack of savings, the study says, by:
- working at part-time jobs (71%);
- selling off collectibles, antiques or other possessions they do not need (44%);
- selling their homes (32%); and
- renting out parts of their homes (19%).
“The study’s findings should send an urgent message to younger Canadians that they have to think beyond their immediate day-to-day financial needs and always have an eye on their future, particularly their retirement,” said Buttigieg.
