Does a written retirement plan help Canadians manage fears about inflation and healthcare costs?

Recent research from Fidelity Investments Canada finds that those of us with “a written financial plan” are “more financially, socially, physically and emotionally prepared for retirement than those without one,” and may feel more ready to face inflation and rising healthcare costs.

Results of the research are highlighted in a media release from Fidelity.

“With stubborn inflation, market volatility and global uncertainty, it’s not surprising that Canadians are anxious about their future and their retirement,” states Peter Bowen, Vice President, Tax and Retirement Research, Fidelity Investments Canada ULC in the media release. “However, Canadians continue to demonstrate the value of advice and planning: those with financial plans feel more secure and prepared for retirement. Those without a plan should seriously consider the benefits it could have for their overall well-being,” he continues.

The research found that 83 per cent of those with a written financial plan felt “financially prepared” for retirement, compared to 47 per cent of those without one. Eighty-three per cent of those with written plans say they worked with a financial advisor to get one, the release notes.

However, only 23 per cent of those surveyed say they have such a plan. Amongst Canadians, Quebecers have the highest proportion of citizens with a written financial plan (30.7 per cent), the release adds.

The research took the temperature of Canadians on their main retirement concerns.

Rising inflation and market volatility were identified by pre-retirees as “key risks” through the research, and concerns over these two factors have increased dramatically since this annual study was launched eight years ago, the release states.

For those already retired, inflation was the top risk identified, with healthcare costs seen as the second highest.

Sixty-two per cent of pre-retirees surveyed felt inflation is “holding them back from retiring when they would like,” a jump from 56 per cent in last year’s edition of the research, the release notes. Of that same group, 66 per cent felt “that inflation will reduce the purchasing power of their savings and have a negative impact on their standard of living,” the release points out.

Ontarian pre-retirees are the most concerned about inflation’s impacts — 69.9 per cent of them feel inflation is a top concern, while overall Canadians worry “the rising cost of living brought on by higher inflation is exacerbating these savings concerns and making many Canadians feel less comfortable about their retirement plans,” the media release concludes.

Lots to digest here. Clearly, having a written financial plan authored by an advisor seems to equip many of us with confidence. Inflation is trickier, and we can see that many folks thinking of pulling the chute on work may worry about what their spending power (on a reduced income) will be like when they land.

If you have a workplace retirement program of some kind, you’re ahead of the game here. If you don’t have a program — or, as the owner of a business, would like to offer one to your employees as a way to attract and retain them — have a look at the Saskatchewan Pension Plan. SPP’s open, voluntary defined contribution plan has been successfully delivering retirement security to both individuals and organizations since 1986. Find out what SPP can do for you today!

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A look at the best of the Internet, from an SPP point of view

Half of retirees plan to bring debt into retirement – those with written plans remain optimistic

Half – 46 per cent, to be exact – of Canadian pre-retirees expect to “have long-term IOUs heading into retirement,” but those with a written retirement plan are still optimistic about life in retirement, new research finds.

Fidelity Investments Canada ULC put together this research in their annual study, called Retirement 20/20, according to a recent media release.

“For Canadians, the path to retirement is becoming more complex. With higher debt loads and longer than ever life expectancy, those approaching retirement must think critically, plan ahead and take action today,” states Michelle Munro, Director, Tax and Retirement Research, in the release. “Our latest research findings show that working with a professional financial advisor and putting a plan on paper is the best way to navigate this new environment.”

The study found that 87 per cent of those surveyed who had a written retirement plan were optimistic things would be fine in retirement – for those without such a plan, 42 per cent had a negative outlook about retirement, the release notes.

Other key findings from the research:

• About three in four of those surveyed (70 per cent) say they believe they will be working in retirement
• More retirees (34 per cent) are working to keep mentally and physically active
• Those with a written retirement plan feel better prepared “emotionally, socially and physically” for retirement

Save with SPP used a written plan to prepare for retirement. It certainly helped cement the choice of when to leave full-time work behind. The key things were to note all sources of retirement income (income at the start, and then later, government programs and so on) and at the same time, to note all expenses. Five years later, this plan is still working, and of course there have been unexpected expenses that messed up the plan occasionally. But the ship is still sailing on course.

One of our friends actually prepared for retirement by figuring out what the retirement income was and then living on it – in practice mode – for a few months prior to the big day. That took all the surprises out of it for he and his spouse. Clever.

12 great things about retirement

Many of us (certainly this writer) obsess about the financial side of retirement, but there’s a lot of other less tangible aspects about it that we must not lose sight of.

US News and World Report lists a dozen great things about retirement, including “newfound freedom,” being able to “quit the rat race,” catching up on all the movies you didn’t have time to see, being able to work if you like (but not work if you don’t like), time with kids and grandbabies, volunteering, and time for travel.

You can’t put a dollar value on these things – in a sense, the time to do what you wish is priceless. So no matter how the finances work out, you’ll still benefit from being away from the office on permanent hiatus.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22