15 Interesting Financial Statistics

Hey everyone,

I recently read an interesting article, titled '15 Interesting Investment, Personal Finance and Retirement Statistics [Canadian]', that listed some very informative financial statistics.

For those of you who would rather just get the gist of the article, I have listed the statistics below. As always, I wish you all the very best in you endeavors.

- Only 38% of Canadians contributed to a Registered Retirement Savings Plan (RRSP) before the March 1, 2010 deadline (BMO – March 2010)

- 68% of Canadians haven’t opened a Tax Free Savings Account (TFSA) (Mackenzie Investments – February 2010)

- 53% of Canadians 55 years of age and over have not done any retirement planning (RBC – December 2009)

- Only 34% of Canadians reported having a financial plan (BMO – February 2010)

- 30% of Canadians expect that they will have to work after retirement (Investors Group – November 2009)

- 20% of Canadians are counting on the Canadian Pension Plan, a lottery win or an inheritance, instead of contributing to an RSP (TD – February – 2010)

- 37% of Canadians plan to delay their retirement, up from 28% a year ago (Investors Group – November 2009)

- 40% of both retirees and pre-retirees are concerned about maintaining their standard of living (RBC – January 2010)

- 48% of Canadians who are still in the work force are worried about not having enough savings (RBC – January 2010)

- One in five (18%) Canadians do not know what they hold in their investment portfolios (BMO – February 2010)

- 58% of Canadians who know what investments they hold think they are not on the right track (BMO – February 2010)

- 25% of Canadians feel they have enough money to fulfill their retirement dreams (RBC – January 2010)

- 21% of Canadians say they definitely did not save enough money for retirement (TD – February 2010)

- 75% of retired Canadians don’t know how much they spent in their first year of retirement (RBC – January 2010)

- 52% of retired Canadians felt they spent more than they expected in their first year of retirement (RBC – January 2010)

The Problem With Retirement These Days

Happy Easter weekend everyone,

I find myself with a few minutes to spare while waiting for my family to finish cooking all of us a fantastic meal and, as such, I would like to quickly write about a serious problem that many people are now facing when it comes to retirement.

Human beings are living longer than they ever have before, sometimes, even passed the age of 100 years. As the ideal retirement age for most people is still around 65, people should adequately plan for about 35 years of income once they retire. Sadly, this is rarely the case, as can be seen at Walmart's across the nation. It occurs to me that it is rarely the choice of the elderly door greeter's to have gone back to work at such a late age, more likely, they are forced to look for an income once they run out of retirement savings.

It is important to plan far ahead of retirement, so as to insure the proper forecasting of necessary income, once one actually retires. A good exercise to implement is to write down the actual age that you would like to retire, then to decide how much income monthly you will require once you retire, and finally to calculate the amount of years between that age and 90 (the average life span of most humans ends short of 90 years). Once you have all of these figures, multiply the monthly income you have listed by 12 (months in a year) and then again by the number of years between when you plan to retire and 90. This will give you an idea of how much income you REALLY need to retire.

This is, of course, a relatively simple calculation. We should also consider taxes and inflation when calculating necessary retirement income. Inflation, for those of you who are unfamiliar, is the silent predator who always eats away at the value of our money. Taxes, as we are all aware, have been steadily increasing for years. It is almost a foregone conclusion that taxes will be considerably higher once we all reach the age of retirement than they are currently. As the cost of living goes up every year, one must take into consideration the likelihood that what one may consider a sufficient monthly income NOW, will not be able to support him/her once he/she actually retires.

Many people, once they perform an analysis of how on track they are to reaching their ideal retirement age, are startled to learn that there is NO way that they will be able retire when they would like to (if at all). While this can be alarming, it is important to confront the problem now, while there is still time to make the necessary changes to our retirement strategies.

The key to retiring with enough income to sustain yourself is to make sure that there are multiple streams of income coming in during your retirement years. Sitting down with a financial services industry professional now, to learn about some of these alternatives, may save you a great deal of hardship down the road; when, invariably, it will be too late to do anything except go back to work. Sadly, Walmart is always hiring...

Don't Put All of Your Eggs In One Basket!

Hey everybody,

At a conference that Andrea and I attended not too long ago one of the speakers mentioned that he had recently read an article, originally from Time Magazine, which detailed the importance of not relying solely on 401(k)'s (or RRSP's for us Canadians) when thinking of retirement income.

There was a time when the relationship between employee and employer was much more dependant. Employee's could rely on the company that they worked for to take care of them and in return, employer's could rely on the loyalty of the employees working for them. I am speaking of the defined pension plan system.

Sadly, as we slowly watch one company after another eliminate their defined pension plans , the trend has been to replace those plans with some kind of matching contribution plan. Basically, the employee pays into a 401(k)/RRSP of his/her choosing and his/her employer matches that contribution, usually up to a certain level.

The major reason for this shift is that these days, with so many jobs being outsourced, companies are looking for places to cut operating costs. Unfortunately the easiest way for them to do this is by reducing employee wages, cutting employee perks (like the defined pension plans), or by cutting positions entirely.

The large misconception is that the system we have fallen back on, namely the joint contribution plan, was intended to REPLACE the defined pension plan. The truth is, contributing to these tax savings vehicles was only EVER intended to provide supplementary income for people during their retirement.

So the rule of thumb for anyone who has ever only been funneling money into a 401(k)/RRSP up to this point is that they may want to strongly consider diversifying into other avenues as well. Remember, don't put all of your eggs in one basket!

I have listed a link to the Time Magazine artible below, if you have a few minutes it makes for a solid read, cheers!

Why It's Time to Retire the 401(k)

Pay Yourself First

Hey everyone,

We all know that putting money aside to invest for the future is important, but many of us have a hard time going out of our way every month to actually call our financial institutions and go through this process. The internet has made things slightly easier, now we can move money to various investment accounts with the click of a button. Still, even with the very best of intentions, many of us are neglecting what should really be a monthly habit.

Have you heard of the concept 'Pay Yourself First'? If we take a look at things from an employee perspective, a full work day typically consists of eight hours. Imagine, if you will, taking the wage equivalent of one of those eight hours and investing it for the future? This concept basically means that you set up a pre-authorized withdrawl for a month's worth of those accumulated wages and, on a date of your choosing, your financial institution, broker, or investment company will move them to your investment account of choice.

while this concept seems simple in nature, many people do not practice it, always saying, "I'll just save a whole bunch of money and contribute a lump sum later sometime." The problem with this is that your money does not earn inerest while that 'lump sum' is accumulating and also, unfortunately, you can not retire on good intenstion alone.

Most people would agree that setting aside one hour's worth of their work day's wage is manageable, but over fifteen years that one hour a day can turn into a significant benefit for you to supplement your retirment income. With people living longer and longer these days it is imperative that we do what we can to make our retirement funds last as long as possible. So remember, pay yourself first!

I'm Back!

Hey Everyone,

After a long break of not posting to this blog, I have returned to resume my mission of helping individuals have a better understanding of money, business, and all the little things in between. I have been spending a lot of time working on my own business over the last while and have learned much in the process; some of which I hope to impart to those who are kind enough to take their hard earned free time to review this blog every once and a while.

Today I would like to share a refreshing article that I read on the subject of owning one's own business, written by Michael T. Robinson, from CareerPlanner.com. I found it to be a really great overview of some of the key features that anyone thinking of starting his/her own business may want to consider. Just click on the link below to proceed to the article and ENJOY!

The Benefits of Owning Your Own Business