Canadians drastically reducing retirement targets: report
Roughly half (53%) of Canadians feel they're at or ahead of where they should be in terms of retirement savings, according to a rcent study from RBC.
That's good news, until you realize that most of them have actually lowered their retirement savings goals by a hefty margin.
For those who have yet to retire, the magic number seems to have been reduced by more than $200,000 to an average of $564,000 in 2012 from $778,000 in 2011.
Most say they either have pushed their retirement to a later date or are unsure about when they will retire. Talk about diminished expectations.
A huge six digit target can be intimidating, particularly if you're still trying to figure out how to pay those monthly bills. For many people, it’s probably no more useful than those medical charts telling you the optimal weight for your height.
And the number itself can be misleading, particularly if you don't have a good sense of how inflation, the crab grass of retirement planning, can work against you.
Behavioral economists warn of "wealth illusion," or the tendency for people to overestimate the sustainable income a large pile of money can generate.
Fidelity Investments recently put together an age-based savings guideline with a range of savings goals that might make you think in a different way, assuming the firm’s daunting assumptions don’t scare you away altogether.
And Fidelity knows that.
“We believe these savings targets offer a rule of thumb to help employees get engaged in retirement planning by making it simpler and more achievable,” says James M. MacDonald, president of workplace investing at Fidelity.
Still not sure where you stand? Have a look at this calculator to get a glimpse of the future.
Do you have a magic number that you're working towards? Has it been adjusted up or down in recent years?
By Gordon Powers, MSN Money