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Rogers Group Financial (RGF) publishes a quarterly newsletter, The Financialist, which is written by the advisors of our firm. The articles are aimed at providing meaningful information relevant to the specific needs of our clients, and each covers a variety of topics (including specific investment strategies and the details of individual investment products).  The latest issues of The Financialist are below; for a complete archive and access to printable .pdf articles, please click here

2016 Horizons Report

The Financialist • Issue 130 • July 2016

BY CLAY GILLESPIE BBA CFP CIM FCSI

We are pleased to present the results of the 2016 Horizons Retirement Report. This report summarizes the dreams, fears, hopes and challenges of Canadians planning to retire within the next 3 to 7 years. At the same time, it asks questions of Canadians who have been retired 5 to 10 years to give the soon-to- be retirees a glimpse into the future.

 

The biggest concerns for the pre-retiree group are (in order of importance):

 

1. Health and fitness

2. Market volatility

3. Having enough money

4. Inflation levels

5. Filling time and not growing bored

 

97% of Canadians expect their lifestyle to be the same or better than the average Canadian in retirement but only 48% of Canadians have prepared a written financial plan. Those who have a written financial plan expect to have higher monthly incomes than those without a written financial plan.

 

Additionally, 73% of Canadians describe themselves as being at least reasonably familiar with investing in the types of investments available. However, a small test on financial literacy seems to suggest otherwise.

 

 What happens to bond prices when interest rates go up? Answer: They decline – 46% answered correctly

 

What is the maximum CDIC coverage for GICs? $100,000 - 41% answered correctly.

 

How much of a realized capital gain is taxed in Canada? Answer: 50% – 50% got this correct.

 

Which one of GICs, Canadian equity or money market accounts performed best in the past 10 years in Canada? Answer: Canadian Equity – 52% of the respondents got this correct.

 

The level of debt has remained constant through the years of us doing this report – 31% expect to retire and have debts greater than $10,000 and 20% expect to have more than $50,000 in debt.

 

Overall, Canadians nearing retirement feel much more prepared emotionally for their retirement than they do financially. 

 

If they had to reduce their living expenses in retirement, most Canadians would choose to downsize to a smaller home before cutting back on expenses. The least likely option would be to move in with their adult children.

 

While 92% of pre-retirees expect life to have a more relaxed pace after they retire, only 75% of retirees report a more relaxed pace to their retirement.

 

Travel is the most significant goal or dream that Canadians hope to accomplish once they retire, as 43% of Canadians consider travel to be their top retirement priority. Although travel is important, 28% of retirees reported travelling significantly less than they thought they would. Retirees also reported spending more time pursuing hobbies and helping with grandchildren than expected.

 

The most widely-given advice retirees had to share with Canadians still planning for retirement was a caution – Be realistic with finances and plan ahead.

 

Is Retirement Bad for your Health?

 

A recent study was published in the Journal of Epidemiology and Community Health on March 21, 2016. This study was done to see if there was an association between retirement age and mortality. According to the study, they "aimed to examine the association between retirement age and mortality among healthy and unhealthy retirees and to investigate whether sociodemographic factors modified this association”.

 

The conclusion of this study was, “Early retirement may be a risk factor for mortality. Employed working life may provide survival benefit among US adults.”

 

This study found that, among healthy retirees, a one-year-older age at retirement was associated with an 11% lower risk of mortality. In the case of unhealthy retirees, a one-year-older age at retirement was associated with a 9% lower risk of mortality.

 

One of the lead authors, Chenkai Wu, was quoted in the Guardian newspaper (May 2, 2016) suggesting that it’s not employment but what it represents to people that may be behind the results, “Keeping active and getting involved in voluntary work definitely brings retirees a lot of benefits that would’ve been brought about by continuing to work.”

 

The study does not suggest why this is the case and much more research will be required to understand these results. But it does point out that engagement in life is important for your long-term physical and mental health.

 

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