How much do you need to save for retirement? Is there a specific number or percentage of your working income you should be replacing?

According to some experts, it might be less than you think.

A study from the Employee Benefit Research Institute found that people retiring with modest assets (less than US$200,000, not including the value of their home) still had 75% of their cash assets 18 years into retirement. That percentage rose to 88% when the retirement savings were US$500,000.

It’s true that outliving your savings is a real possibility for retirees. But experts suggest that having more than three-quarters of your cash savings left after 18 years of retirement is spending too cautiously; having 60% left is a more reasonable target.

In other words, not only is it important to have a plan to save for retirement, but it’s also important to have a plan for drawing down those assets in a reasonable and efficient way. Here are some suggestions on how to do that.

Think about your retirement lifestyle – Carefully consider what your lifestyle will look like. Will you travel a lot or stay close to home? Will you downsize your home? What hobbies or activities will you enjoy in retirement, and what are the associated costs?

Your lifestyle will also change over the years. You’ll likely be more active (and spending more) in your 60s and 70s, and then spending more on healthcare or home care in your later years.

Ask for advice – Working with an advisor can be helpful when crafting a plan for retirement and managing your income during your post-working years. Members of the Canadian Baptist Pension Plan (CBPP) have a unique opportunity to work with a retirement consultant to chart the best course.

With the Canadian Baptist Retirement Income Fund, you have access to a unique fund for providing an income stream in retirement. You also have access to a retirement consultant to help you make a plan so that you don’t over or under spend your assets. After all, wouldn’t we all like to have the peace of mind of knowing we are stewarding our funds wisely?   

Keep on course – In addition to pre-retirement support, you can work with the consultant during your retirement to help you stay on track. This is key because experts recommend that retirees adjust their budgets in retirement, depending on how their investments and lifestyle choices change.  

Take advantage of the in-plan options available – By keeping your money in the CBPP or joining the Canadian Baptist Retirement Income Fund, you’ll continue to benefit from low management and investment fees that you’re currently enjoying as an active member. It’s a more efficient way to maintain your income in retirement and ensure you’re getting the most for your money!

It might take a little time and effort, but with a solid strategy and help from advisors, saving for and planning your retirement isn’t as daunting as you might think.  We’re here to help email us at retire@cbbenefits.ca. 

As the prevalence of DC pension plans continues to rise, the market is now turning its attention to a common challenge: how can we help people turn their DC savings into a reliable retirement income that lasts for the rest of their lives?

In a recent Globe and Mail article, pension expert Bonnie-Jeanne MacDonald of the National Institute on Ageing at Ryerson University suggests the creation of a pooled-risk pension, allowing members to use their DC savings to buy a secure pension income to last them the rest of their days. With this new option, the investment and longevity risks that each member faces would be reduced by pooling together the DC assets of many members. Having many members sharing the investment risk would lessen the impact of a market downturn which would be challenging to handle as an individual investor. And the longevity risk (i.e., the risk of outliving your savings) would be lessened because the large pool of members would allow for an actuary to estimate what will happen each year, and calculate an adequate pension income, with greater certainty.

Unfortunately, the pooled-risk pension isn’t an option in Canada right now. But in the absence of a pooled solution, the Canadian Baptist Pension Plan (CBPP) has some important features to support your transition to retirement and help you with your retirement income solutions. 

Group LIF/RIF – When you retire with a DC pension plan, you need to convert your savings into an income stream. Usually, you have a choice between buying an annuity, and/or transferring your savings out of the plan and into a locked-in vehicle [like a life income fund (LIF) for DC pension assets or retirement income fund (RIF) for RRSP assets] at another financial institution. However, the CBPP offers its own in-plan Group LIF/RIF. It’s a progressive approach to managing retirement income – one we’ve put in place to help take care of our members future. 

Not all plans offer a Group LIF/RIF, but ours does, and it comes with some important advantages. Keeping your money in the CBPP when you retire allows you to maintain many of the same benefits you have now as an active member. You will pay significantly lower investment fees than what you would pay to invest your funds at your local bank. You’ll also benefit from ongoing oversight of the program by CBPP.  You continue to have the same investment options in addition to a special Retirement Fund specifically designed for CBPP retirees. 

Ready to Retire – When you’re nearing retirement, support is available free of charge to our members through the Ready to Retire program. This program can help you make informed decisions, fill out paperwork and act as a liaison with financial institutions, if needed. If you have any questions about retirement or the transition process, email retire@cbbenefits.ca.

These are just a few examples of the support CBM offers to help you retire successfully. Be sure to read next month’s blog entry on lifestyle expectations in retirement and how they’re connected to how much you need save – you may need less than you think!

The CB Benefits Pension Plan investments are managed by GLC Asset Management (Great West Life). Brent Joyce, Chief Investment Strategist for GLC, talks with Business News Network TV about what investors may expect in 2019.

https://www.glc-amgroup.com/news-insights/market-outlooks-insights/brent-joyce-shares-his-market-views-on-bnn.html

In this video Highlights of Brent’s interview:

• Today’s debate remains around how much global economies and corporate earnings will grow and, importantly, not how much they will shrink.
• “It’s about moderation” – we believe the economy is slowing but not contracting.
• Corporate earnings growth is likewise shifting from acceleration to moderation (not decline).
• Fixed income’s value as a risk-mitigation tool has increased and will continue to increase the longer we go in the cycle.
• Looking into 2019, we’re cautiously optimistic and expect to see the S&P 500 and the S&P/TSX Composite to trade back up.

Welcome to CBBenefits Blog.  This is a location in which we are hoping to engage you! Canadian Baptist Pension and Benefit Plan members.   In the coming weeks and months, we hope to address a number of topics that are unique to our plan members.  Such as:

• Understanding your benefits and "Choices" during your employment journey
• Discussing the unique features of the Canadian Baptist Pension Plan (CBPP)
• Changing the retirement equation
• Retirement planning
• Financial planning
• The stages of the employment journey
• CPP enhancements

These are just a few of the topics we hope to review.  Periodically, we hope to post some interesting articles and add commentary with a twist that links it to your experience.  We hope you join us in the conversation.