Retirement more about having financial 'cushion' than certain lump sum, Sask. financial expert says

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Canadians need an average of $1.7 million to retire in 2023, up from $1.4 million in 2020, according to a recent survey conducted by BMO Canada.

However, Kelly Remple, a financial advisor at Remple and Dusyk Financial said more importantly, people need to make sure they have a financial cushion to support themselves and their lifestyle, rather than striving to have a certain lump sum that may not take into account different lifestyles in different parts of the country.

“I think it’s always important to be aware of those national trends for sure but I would also argue that people living in Vancouver and Toronto often have different [financial] challenges than those living in Saskatchewan,” Remple said.

Remple said trends that calculate what people need to retire can be hard to relate to because it’s difficult to put people who live thousands of miles apart into the same category.

He also said not everyone will have the same spending habits or debt left to pay off.

“I believe that for your average family, it’s more important to have a clear understanding of your own personal situation,” Remple said.

“What the right course of action is for you is more important than understanding what the average trends are of which many people are included in that live thousands of miles apart.”

The survey from BMO said that the average amount held in Registered Retirement Savings Plans (RRSPs) on the prairies was $138,391. The national average was $144,613.

The survey also said that inflation hit a four-decade high of 8.1 per cent in the summer of 2022 and fell to 6.3 per cent in December, 2022.

“BMO's Retirement Study found that 74 per cent of Canadians are concerned about how current economic conditions, most notably inflation and rising prices, will affect their financial situation and 59 per cent believe this will affect their confidence in meeting their retirement goals,” a BMO news release said.

According to the survey, 44 per cent of Canadians are confident they will have enough money to retire as planned, but 74 per cent are concerned about how inflation and rising prices will affect their finances.

“Spend within your means,” Remple said. “If you know that the price of everything is going up, you may have a little bit less disposable income to spend on material things, but at least you’ll sleep better at night knowing that you’re not putting yourself into further debt in an interest rate increasing environment.”

Remple has been a financial advisor since 2008 and said 2022 and 2023 rival that year for unpredictability as well as how challenging it has been to make estimations and predictions for clients.

“Since 2008, now has absolutely been the most challenging time,” Remple said.

Remple said a major reason is the rapid increase in interest rates, which has meant clients’ portfolios did not have a fixed income side to them to prop them up when stocks and bonds fell.

“Normally what happens is when stocks go up, everybody is happy, but that did not happen this time. People didn’t have the fixed income side of their portfolio to sort of prop them up this time.”

The BMO survey was conducted between Nov. 4 and 7, 2022 by Pollara Strategic Insights via an online survey of 1,500 people. The survey’s margin of error is plus/minus 2.5 per cent, 19 times out of 20.

With files from The Canadian Press.