(NC) - When picturing retirement, we often think of exotic vacations, focusing on our hobbies or spending time with family and friends. It's easy to forget that, along with our big-picture plans, there will also be day-to-day expenses as well as unexpected costs that can eat into our retirement savings.
With changes to the Canada Pension Plan (CPP) on the way over the next few years and employer-sponsored pension plans becoming less common, future retirees will need to take on more individual responsibility to ensure they have enough income for their retirement.
"Canadians are living longer, and many fear they will outlive their savings," says Tina Di Vito, Head, BMO Retirement Institute. "In order to be prepared, the first step is for Canadians to think about the various factors that will affect their retirement, including their health, life expectancy, marital status, the cost of living and the level of expenses they will incur."
In order to ensure a comfortable retirement and maintain peace of mind, it's best for individuals to plan ahead and assess how much income they will require on a monthly basis after they stop working. Individuals should also think about where this income will come from and how much of a "sure thing" this income is.
BMO recommends that every Canadian should have at least one source of retirement income that is guaranteed (ideally, this guaranteed component should make up at least 30 per cent of your overall retirement cash flow). To help Canadians achieve this, BMO recently introduced the BMO Lifetime Cash Flow. It's a deposit that can provide you with a six per cent payout every year for the rest of your life. It also offers tax savings since no taxes apply for the first 25 years. Essentially, it acts as a safety net for retirement and helps ensure you have at least a portion of your retirement income guaranteed.
For more information on securing your retirement, please visit www.bmo.com/smartinvesting or speak with a financial professional at your local BMO branch.
