By Jim Jamieson
The Province
Wednesday, February 25, 2004

Many younger Canadians are in danger of not having sufficient retirement savings if they don't start a financial plan early in their working lives, says a new report from TD Bank Financial Group.

The report says that Canadians who delay saving may not be able to live comfortably in their retirement years.

The report pointed out that many Canadians are spending fewer years working than their parents, as more years of post-secondary education delay their entry into the workforce, while early retirement hastens their exit. With life expectancy also on the rise, savings are being stretched further than ever, at both ends of the spectrum.

And, a host of large expenses are competing for a bigger share of household income, as families struggle to finance the burgeoning cost of post-secondary education for their children, while bearing some of the financial burden of caring for aging parents.
Adrian Mastracci, president of Vancouver-based investment counselling firm KCM Wealth Management, said it's crucial to have a long-term plan for retirement.

"It's hard to tell that to a 25-year old," said Mastracci. "But I am seeing clients coming in their 30s now. Ten or 20 years ago, it was 40 to 45."

Mastracci said the keys are starting to save as early as you can and keeping it up regularly. "Young people should accumulate as much as they possibly can inside an RSP," he said. "The compounding without attracting tax goes a long way."

The report said that determining the size of the nest egg needed is a function of a wide range of factors, including desired income during retirement, duration of retirement, the availability of pensions, the rate of return earned on retirement portfolios and the desired size of the estate.

One rule of thumb is to aim for an annual income in retirement that is 60 to 70 per cent of pre-retirement income.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.