Well now, here is something you don’t see everyday: a financial institution suggesting that people (and not just any people: retired people!) ought to loosen their purse strings and spend a little more money to pursue their dreams. Wait, was that a little pink pig we just saw flying past the window? Has Kim Kardashian declared a moratorium on selfies? Did Alex Rodriguez, one of the highest achieving baseball players of all time, just get fired from the New York Yankees?
No, no and yes, actually. We doubt we need to worry about A-Rod’s ability to enjoy his retirement (beginning at the ripe old age of 41) nor his ability to fund his golden years, having earned a record $400 million over his 20-year career. But average Canadian retirees living on fixed incomes? Conventional wisdom, fueled by worrisome stories about seniors living in poverty and dire warnings from banks about saving enough for retirement, leads us to believe we should all be working harder, saving more and expecting to live frugally.
Expectations, meet reality
A new study by Investors Group provides some uplifting results. Turns out that 9 out of 10 retirees are happily spending more time with friends and loved ones; more than 8 out of 10 are spending time on the hobbies they enjoy; and overall, 8 out of 10 feel their life in retirement is pretty much just what they expected. Sounds like a pretty content lot!
The question that inquiring minds want to know, is whether our retirees are truly satisfied, or have they merely settled for good ol’ Canadian, overly modest expectations?
"Being reasonable in your retirement expectations is a good thing, but it's possible to be too reasonable," says Debbie Ammeter, Vice President, Advanced Financial Planning, Investors Group. "You might give up on truly meaningful experiences out of the fear of overspending. But this is a risk, too – the risk of underliving."
With people remaining healthy and active at older ages, it is not unexpected that nearly 60 percent of the survey respondents worry about having enough money to stretch across those increasingly numerous golden years. Even the concept of living without a paycheque can be stressful to those used to a steady flow of income. Perhaps the dream of sailing the seas on a classic boat, or opening a quaint bed-and-breakfast in the country, will always remain dreams, right?
According to Ammeter, for some retirees, too much fear leads to an unfulfilled life. “You see people put off experiences they’ve dreamed about their entire life, and then they end up with abundant financial resources, but little time or health to achieve their dreams.”
Sure enough, some 71 percent of retirees admit they are finding it hard to strike a balance between enjoying retirement and making their money last… and interestingly none of those respondents worked with a financial advisor. For the retirees who did employ the help of a financial advisor to plan their retirement, only 58 percent felt that same stress.
It would seem that getting expert help with managing retirement finances can help a lot. “An advisor will support you in making decisions based on fact, not fear,” says Ammeter, “And ensure you have access to all the strategies you need to live an enjoyable and rewarding life in retirement."
Of course, if your retirement dream is to own a jet or play baseball in the world series - like, for example, Mr. Alex Rodriguez has done - well, you may need to downsize your aspirations after all. On the other hand, you might find your advisor reminding you to spend a little more of that hard-earned nest egg now… or forever hold your peace.