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Don't wait to plan your retirement income needs Dollars & Sense Peter Watson Guest Contributor 19 | Thursday, March 20, 2014 | OAKVILLE BEAVER | www.insideHALTON.com N inety per cent of Canadians plan to rely on the Canada Pension Plan (CPP) during retirement. Just under one-third expect to rely heavily on that income source despite the monthly average payout of only around $600 per month. This information was taken from the BMO Financial Group's Registered Retirement Savings Plan study released at the end of January. Chris Buttigieg, the bank's Senior Manager, Wealth Planning Strategy said that because of the small monthly amount received from the CPP , it is wrong for so many Canadians to rely so heavily on those payments. He suggests people contribute regularly to an RRSP . Retirement planning has become increasingly more dif cult over the last few decades. We live longer, therefore, we need more retirement funding. Our government, like most other businesses, does not have the extra resources to spend on aging citizens. The era of comfortable pensions has changed with signi cantly fewer retirees receiving a pension. There is also a shift towards different types of pensions. The standard pension that determined the amount of money a retiree would receive regularly during their lifetime has been downgraded to one that shifts the risk of pension income from the employer to the individual. These pensions are called De ned Contribution Plans. A De ned Contribution pension is based on how much you contribute and how well those contributions grow over time. If the stock market and other investments that individuals choose to invest in do not perform well, retired employees get less retirement funding. Companies have shifted the responsibility of retirement planning to the individual because they no longer want the risk of funding long retirement periods. Especially while interest paid on bonds and other types of xed income investments pay such low returns. The BMO study identi ed additional sources of income that Canadians will rely on to augment CPP retirement income. The predictable source of funding that 88 per cent will rely on were personal savings from RRSPs and Tax Free Savings Accounts. Fifty-nine per cent thought a part-time job would be a source of retirement income while 49 per cent mentioned the sale of a home. A signi cant number of people are counting on other generations of their family for nancial support. Forty per cent are planning on an inheritance while 28 per cent look to their children or other family members as a source of funding. The most interesting source of retirement income is the hope of winning the lottery. About one third hopes this will happen. Fourteen per cent rely heavily on the hope of lottery winnings to help them nance retirement. As interesting and varied as the sources of retire- ment income, the BMO survey did reveal that Canadians do know they will need revenue sources in order to pay the bills during retirement. That con rms with all of us that we must develop our own or several sources of retirement income. Our recommendation is that you have the retirement conversation sooner than later. You should begin planning today. Build upon the valuable information from the BMO survey and use it as a catalyst for planning your own options based on ideas from how others approach retirement planning. While there is risk if you are unsuccessful, in my opinion, there is more risk if you take no time or effort now at all to look ahead to the future. As for risk, the risk of winning a lottery is one in 14 million. A better solution is develop your retirement plan and do it now. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner