Retiring in Poverty is Avoidable For Canadians.

Investing your money is the only way to be sure you will come out on top.

But investing in what? Stocks are tanking and while they will bounce back, many Canadians approaching retirement age do not have the time to wait for that to occur.

“Only 15 to 20 per cent of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement, according to a new study from the Broadbent Institute.”

Given the nature of work these days, with fewer and fewer Canadians benefitting from employer based pension plans, retirement assets are looking grim: “the median value of retirement assets of Canadians age 55 to 64 is just over $3,000” Canadians of this age, within 10 years of retirement, are meant to be in their peak saving years: the kids have moved on, finished with school. It’s time for these Canadians to be focusing on their savings.

Let’s do the math:

With no employer pension plan, the average Canadian will receive, annually: $15,970 in CPP / QPP and OAS (Old Age Security) – $25,746 for couples
$3000 (average annual asset at retirement)

$18,970 / $28,746

People who have been earning far greater sums and have been used to a certain standard of living will suddenly find themselves below the poverty line. “Fewer than 20 per cent have enough savings to supplement their income for at least five years.”

While many soon to be seniors are relying on being able to liquidate the equity in their homes, that may or may not be the sum total solution. We are living longer and requiring more medical care than ever before, for more years than even the best savers might have anticipated. In addition, having millions of seniors living below the poverty line and therefore not spending is bad for the economy, as a whole. The Broadbent Report paints a very bleak picture for the future.

We all know that there is no magic wand to understand the situation: the key is to invest for your retirement. But the question from earlier returns: invest in what?
Asian family financial conceptA solid and reliable source of investment income is property. In the right location and at the right price, investment property will not fail. It will not succumb to the whims of the stock market. It will not crash when the price of oil does. We all need a place to live and we all want to live in certain neighbourhoods, with certain amenities available to us. A 20% down payment on a rental property will bring the owner at least 5% return on capital, without price appreciation. With appreciation being in the range of 7% per year (last year, the average price went up 9.4%), the return on capital could be 25% or more.

Call myself or Nikolai if you would like to get together and discuss an opportunity to invest in or sell your property. We haven’t done any advertising for years: our business is strictly word of mouth referrals from satisfied people clients.