Analysts say it’s not financially smart relying on CPP for your retirement

Depending upon your age, figuring out your retirement plans may be something that’s constantly on your mind or it may be on the backburner. But take note, a new survey has found almost 90 per cent of Canadians plan to rely on the Canada Pension Plan (CPP) to get them through their golden years.

Additionally, the new study by the Bank of Montreal found that almost one-third or 31 per cent said they plan to rely “heavily” on CPP, despite the fact that the average monthly CPP payout is less than $600 a month.

Analysts say that given the amount of CPP paid out to retirees, Canadians should not rely on that as their primary source of income to fund their retirement.

“Well it’s not going to be enough to sustain the cost of living,” Surven Lai, BMO Investment sales manager said. “And who’s to say it’s going to be maintained at that level. So we definitely can’t rely on that.”

The study also asked how Canadians plan on supplementing their retirement funds outside of CPP. Eighty-eight per cent say they’d use RRSPs, 59 per cent will seek a part-time job, half of those surveyed will downsize their property, and 40 per cent will hope for an inheritance.

And believe it or not, 34 per cent of Canadians say the lottery will solve their problems and specifically in B.C. that number is 41 per cent.

“I think that may be a rather facetious answer, I hope,” said Heather rivers, Vancity Financial Planning manager.

“We’re probably a  little reluctant to be honest with surveys as far as where we’re going to fund these things. We definitely see people struggling to balance things like housing costs and retirement savings.”

Lai said if you haven’t prepared for your retirement, the best place to start would be to sit down with someone and take the time to do a plan, review where you are today, where you would like to be and where is the gap.

One last thing to consider in your retirement planning is that although CPP is fully funded by investments, there’s no guarantee there’ll be an old age security cheque when you retire as funding for that comes from general federal revenue.

~ with files from Ted Chernecki