The traditional image of Canadian retirees living relatively sedentary lives in small retirement communities across North America is quickly being replaced by adrenaline seeking fifty and sixty something’s marching through foreign streets with sleek designer bags and wallets stuffed thick with plastic.
This is the new retirement reality. Unlike their parents’ generation, today’s boomers are much more transient, moving frequently between careers and leisure activities in search of self-fulfillment. Yet, many challenges lie ahead – from caring for their parents to having financial security throughout a longer life span. Without sufficient planning, this group’s lifestyle priorities could be knocked-off course.
“According to Statistics Canada’s Canadian Population Estimate Table*, by 2015 it is projected that approximately forty per cent of Canadians will be over the age of 50,” says Linda Knight, Vice President, BMO Mutual Funds. “With such a large proportion of the population heading into retirement, the need to preserve boomers’ lifestyles will become even more urgent.”
What is this demographic to do?
Boomers focused on securing their lifestyles well into the future should access the advice and financial planning expertise of an investment professional. Major banks, such as BMO Bank of Montreal, offer qualified investment advice, at no cost, in bank branches across the country.
For those looking to support their income requirements in retirement, the more pressing issue is converting their RRSP into an appropriate retirement income plan. By law, RRSPs must be converted to a retirement income option by the end of the year an investor turns 69. A Registered Retirement Income Fund (RRIF) is one of the most popular retirement income options and can be opened before age 69.
“Think of a RRIF as reaping the benefits of your RRSP. You’ve spent years planning for your retirement by investing in your RRSP and now that you’ve stopped working it’s time to start accessing your savings,” said Knight.
A RRIF provides investors with a regular source of income generated from the savings in their RRSP account.
With a RRIF, investors must take income annually beginning no later than the year after the program was set-up. For example, if you converted an RRSP to a RRIF in 2004, you must begin to receive income no later than the end of 2005.
“Retirement planning, like health and wellness, takes discipline and foresight, but the reward is often the fulfillment of your lifestyle goals,” said Knight.
Information provided by BMO Retail Investments. For more information visit your nearest BMO Bank of Montreal branch or log on to www.bmo.com/ investments.