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The Real Retirement: Why You Could Be Better Off Than You Think, and How to Make That Happen

Book Description

Straight Talk and solid retirement advice for all Canadians

In the face of government changes, financial market volatility, and an aging workforce, Canadians are understandably concerned about the impact on their finances and their future retirement. This reassuring book debunks the generally-accepted claims about necessary savings rates, which can cause paranoia among those beginning to contemplate retirement. The authors offer greater insight into planning approaches that are not widely understood, demystifies retirement targets (age, savings, income), and outlines concrete approaches to maximizing retirement savings.

  • Offers practical advice for dealing with the changes to Canada's retirement system

  • Includes advice for calculating your Neutral Retirement Income Target

  • Contains solid financial advice in accessible language

  • Written by the Executive Chairman and Chief Actuary of Morneau Shepell Canada's national actuarial consulting firm

The Real Retirement offers a down-to-earth guide for preparing for comfortable retirement and shows what it takes to achieve it.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Chapter 1: Crisis? What Crisis?
    1. A Delay of the “Golden Years”?
    2. A Major Overhaul, or a Little Tweaking Here and There?
    3. Are Seniors Poor?
    4. Challenges for Future Retirees
    5. Retiring Later
  6. Chapter 2: Understanding the Foundation—Pensions
    1. The Three Pillars of Canada's Retirement System
    2. Pillar 4
    3. Purpose of the Pillars
    4. A Brief History of Retirement Programs in Canada
    5. The Apparent Problem of Low Coverage
    6. The Long Goodbye to Defined Benefit Pensions
    7. Where the Retirement System is Trending
  7. Chapter 3: Understanding the Foundation—Health Care
    1. Early Days of Health Care
    2. Growing Older and Staying Healthy Is Expensive
    3. No Room for More Taxation
    4. We'll Need to Start Taking Charge of Our Own Needs
  8. Chapter 4: Our Best Days Are Behind Us
    1. The Housing Market's Best Days Are Behind Us
    2. Capital Markets Will Be Less Helpful in Building Wealth
    3. The Demographic Pressures that Encouraged Early Retirement
    4. What about the Next 20 Years?
    5. Putting on our Economist Hats
  9. Chapter 5: When Can We Retire?
    1. Why Is Retirement So Expensive?
    2. Why We Won't Save More
    3. Time to Change the Paradigm
  10. Chapter 6: How Workers Will Respond
    1. The Employment Deal Will Need to Change
    2. Part-Time Work Will Become the Norm for Older Workers
    3. Will People Save More to Retire Early?
    4. A New Measure of Grey Power?
  11. Chapter 7: Deciding When to Retire
    1. The Case for Retiring Early
    2. Planning Your Retirement
    3. It's All a Balancing Act
    4. Retirement and Debt
  12. Chapter 8: The Three Phases of Retirement
    1. Phase 1
    2. Phase 2
    3. Phase 3
    4. Spending in Phase 2 and Phase 3
    5. What About Canadian Retirees?
  13. Chapter 9: We Are Better Prepared than We Thought
    1. Introducing LifePaths
  14. Chapter 10: Your Retirement Income Target—Why You Don't Need 70 Per Cent
    1. Why 70 Per Cent Is Wrong
    2. Specific Pre-Retirement Expenditures
    3. A Revealing Look at Pre-Retirement Expenditures
    4. Comparing Pre- and Post-Retirement Expenses
    5. What About Trying to Reach 70 Per Cent?
    6. If Not 70 Per Cent, Then What?
  15. Chapter 11: The Neutral Retirement Income Target
    1. Challenging the NRIT Concept
    2. Looking at Other Situations
  16. Chapter 12: Arriving at Your Own Retirement Income Target
    1. Rule of Thumb
    2. Modifying the Rule
    3. Summary
    4. Choosing a Savings Rate
    5. Reaching Your NRIT
  17. Chapter 13: Investment Basics
    1. Investment Horizon
    2. Getting Comfortable with Risk
    3. Focus on Real Returns
    4. Investment Options: Good, Bad, and Indifferent
    5. Equities Are Better than They Look
    6. What About Bonds and Similar Fixed-Income Options?
    7. So What Are the Alternatives?
    8. Determining Your Asset Mix
    9. Invest, Don't Gamble
  18. Chapter 14: Managing Your Portfolio
    1. Choosing an Investment Manager
    2. Fees Are Important
    3. Manager Selection Process
    4. Adapting the Process
    5. Monitoring
    6. Statement of Investment Policy
    7. Think Twice Before Changing Your Asset Mix
  19. Chapter 15: Your Expected Return
    1. Building Blocks to Estimate Future Growth
    2. The Result
  20. Chapter 16: Choosing Your Savings Vehicle
    1. Why Invest in a Tax-Assisted Vehicle?
    2. The Accumulation Phase—RRSP or TFSA?
    3. DC Pension Plan or RRSP?
    4. The De-Accumulation Phase—RRIFs
    5. Depletion Anxiety
    6. Annuities: The Cure for Depletion Anxiety
    7. Delaying C/QPP Payments
  21. Chapter 17: Should You Buy an Annuity?
    1. The Purpose of Annuities
    2. Variable Annuities and Annuity Derivatives
    3. Present-Day Annuity Market in Canada
    4. Taxation of Annuities
    5. The Under-Annuitization Puzzle
    6. Annuitizing Later
    7. Should You Annuitize?
  22. Chapter 18: When You Can No Longer Cope on Your Own
    1. Home Care
    2. Retirement Homes
    3. Nursing Homes
    4. Analysis
  23. Chapter 19: Tackling the Big Unknowns
    1. First the Good News: You're in the Right Place
    2. The Clouds on the Horizon
    3. A Quick Look Back at the Private Sector's Response
    4. A Likely Model: U.S. Corporations and Their Benefits Programs
    5. The Challenge of Dealing with Downloading of Costs
    6. The Long-Term Care Question
    7. One More Time: Our Three-Pillar Retirement System Is Doing Well
  24. Chapter 20: Ending on an Optimistic Note
    1. Of Course, There Are Always Challenges
    2. Prepare to Assume More Responsibility
    3. The False Glory of Retiring Early
    4. Take Charge of Your Life!
  25. Appendix A: Pillar 1 and Pillar 2 Benefits
    1. Eligibility Age Raised for OAS and GIS
    2. Option to Defer OAS
  26. Appendix B: Income by Source
  27. Appendix C: NRIT Charts
    1. Common Assumptions
  28. Appendix D: A Guide to Retirement Programs in Canada
    1. Types of Retirement Programs
  29. Glossary
  30. Endnotes
  31. Acknowledgements
  32. About the Authors
  33. Index