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New book destroys popular myths about retirement in Canada

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Pension/Retirement / Canada

New book destroys popular myths about retirement in Canada

Fred Vettese and Bill Morneau say Canada has no retirement crisis

TORONTO, Dec. 13, 2012 /CNW/ - Canada is not facing a retirement crisis, according to a new book by Fred Vettese and Bill Morneau of Morneau Shepell. Vettese, the company's Chief Actuary, and Morneau, Executive Chairman, have collaborated on a book that destroys many myths about retirement.

The Real Retirement: Why You Could Be Better Off Than You Think, and How to Make That Happen, just released by John Wiley & Sons Canada, says Canadian seniors are among the best-off in the world and can look forward to a better retirement lifestyle than they think.

"There is widespread perception that Canada is suffering a retirement crisis," says Vettese. "But there is no crisis and our research suggests there won't be one. That is because, for most Canadians, our real retirement income targets are lower than most of us think. The target is not 70 per cent, but is closer to 50 per cent. At the same time, our potential sources of retirement income are higher than we realize."

The book shows that the poverty rate among Canadian seniors is less than half what it is for working-age Canadians. This is partly because there are really four pillars to Canada's retirement system, not just the three we usually think of: Old Age Security and the Guaranteed Income Supplement, the Canada Pension Plan and Quebec Pension Plan, and tax-assisted vehicles such as RRSPs and workplace pension plans. The fourth pillar consists of assets outside of traditional retirement vehicles in the form of real estate, cash, stocks and bonds.

"The assets in this fourth pillar far outweigh the sum of all the assets in the first three pillars," says Bill Morneau. "Canadian seniors have more assets that can be converted into retirement income than they realize."

The authors say the next 20 years will be challenging because of lower investment returns and longer life spans. Canadians, however, will cope with this change by working longer.  The average retirement age will rise from 62 to about 66.

Other conclusions in the book:

  • We spend a lot less when we're 80 than when we're 60, which means we can spend a bit more at 60 than we think,
  • Even with low interest rates, annuities are a surprisingly good deal by the time we're 75, and
  • The prospect of paying for long-term care shouldn't stop us from spending our money wisely while we're still healthy.

Fred Vettese, who is a frequent commentator in the media about pensions and retirement, has more than 25 years of experience in the retirement industry. He speaks at conferences such as the ones organized by the Conference Board of Canada, and is a member of the C.D. Howe Pension Policy Board.

As Executive Chairman of Morneau Shepell, Bill Morneau has led the firm to become the largest company in Canada offering human resources consulting and outsourcing services. He is engaged with clients across the full spectrum of Canadian business and government in their management of pensions and benefits.

About Morneau Shepell Inc.

Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of Employee and Family Assistance Programs, as well as the largest administrator of pension and benefits plans. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position. Established in 1966, Morneau Shepell serves more than 8,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit

SOURCE: Morneau Shepell Ltd.

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Tricia Ramsarran

Jerry Amernic