Working into retirement becoming a growing trend
According to a new study by BMO Financial Group, more and more Canadians — 81 per cent to be exact — plan on working during their retirement.
Larry Moser, regional sales manager at Bank of Montreal, says it is a growing trend amongst retirees who feel the need for an additional income going into their retirement years.
“People are living a lot longer today,” explains Moser. “Life expectancy was typically around 72 years old. Now people are living well into their 80s and even 90s and are having to fund their retirement a lot longer than they ever had to [before].”
The decline in employer-sponsored defined registered pension plans, coupled with reforms to government pension plans has also created a greater need for people to supplement their income during retirement. This also rings true for those who haven’t been saving aggressively for their retirement through other retirement savings vehicles.
“Some people think they have lots of time and start to save for their retirement too late,” says Moser. “The more money you have saved the easier it is going to be in your retirement years.”
According to the study, the top reasons for people working into retirement are to earn additional money (75 per cent); to stay mentally active (62 per cent); and to enjoy a hobby (53 per cent).
Before starting a business, Moser suggests it’s wise to do some research.
“Business plans need to be written and need to be economically viable,” he says, adding that you don’t want to be working even harder and longer into your retirement years.
The study found retired men are more likely than women to start their own business.
It also found that 47 per cent of Canadians would fund a business using some of their retirement savings, while others would use a separate savings account earmarked for a business (43 per cent); a loan from a bank or another source (34 per cent); an inheritance (21 per cent); or a loan from a family and/or friends (14 per cent).
But what about those of us who want to simply enjoy the dream of a leisurely retirement?
“The first thing you should do is get a financial plan and talk to a professional about how much you should be saving,” says Moser. “The longer your investment, the better. Simply put, time plus money equals more money.”
For the full BMO Study: Two in Five Canadians Open to Being Their Own Boss in Retirement
How do you plan on spending your retirement? Comment below …
-- Donna Donaldson, MSN Money