Dale Jackson

Personal Finance Columnist, Payback Time

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ANALYSIS: The financial future is always uncertain for retirees, but the present is making it even more uncertain.

Fixed income yields continue to languish and the most recent equity market downturn is chipping away at a lot of retirement nest-eggs.

A recent study from Investors Group found 64 per cent of Canadian retirees worry about outliving their savings; 37 per cent say they have had to alter retirement plans to adjust to the new reality.

How much anyone needs for retirement is a mystery on two levels: no one knows how much of our savings will be lost or gained in the markets, or how much will be eaten by inflation. On a personal level, we’re not really sure how much we will need or how long we will need it.

That’s where a good financial advisor comes in before retirement. Planning for retirement is more than investing. It’s understanding an individual’s needs and goals as they grow older.

For those who choose to go it alone, several financial websites offer detailed retirement calculators. Whether you do it yourself or talk to an advisor, there are some basic things your need to ask yourself first:         

• How long will it be until I retire?
• How long do I expect to live in retirement?
• How much money do I need to live each year in retirement as I get older?
• What are my sources of retirement income (IE, registered retirement savings plan, tax-free savings account, company pension, Canada Pension Plan, Old Age Security)?
• How much will my investments grow each year?
• When will my debt be paid off?
• What are my current savings and estimated contributions to retirement?
•  What will be the future rate of inflation?

There is no certain answer to how much we will need in retirement, but a good plan will provide a clearer path.

Dale Jackson is BNN's Personal Investor. Follow him on Twitter @DaleJacksonPI