Many Canadians say bad economic news has them discouraged about retirement, said Fidelity Investment’s Peter Drake at the Canadian Institute of Financial Planners (CIFP) annual national conference in Vancouver.
He urges advisors to help their clients put macroeconomic issues into context. They need to remember that Canada’s a great place to retire, with a solid healthcare system and demand for older workers.
Drake cites 8 reasons why Canadian retirees are in good shape:
1. Canada’s labour market provides opportunities for older workers. Fidelity’s research finds 79% of pre-retirees expect to work into retirement, and employers want older workers with experience.
2. Rising housing prices have added wealth. Most retirees who purchased homes in their prime are set to weather a housing correction and still have added value that will generate extra income.
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3. Canada’s strong fiscal position relative to other countries.
4. Workplace pension coverage is likely to improve. There are ongoing discussions about how governments can improve employee pension coverage.
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5. Low and predictable inflation. Inflation affects retirees more than any other demographic group — it can reduce the purchasing power of their savings — but the Bank of Canada has a strong record when it comes to keeping inflation low.
6. Health Care’s 70/30 rule. 70% of expenses are covered by the government, and 30% by the individual. In contrast, Americans, have to save $240,000 to cover health care in retirement, says Fidelity.
7. Canada’s Public Pension system is sustainable. The federal government’s actuary regularly checks the health of the Canada Pension Plan (CPP), and has declared it solvent to pay all liabilities for the next 75 years.