OUTCOMES Hosted by the Prairie Regional Council May 22, 2018 Delta - - PowerPoint PPT Presentation

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outcomes

OUTCOMES Hosted by the Prairie Regional Council May 22, 2018 Delta - - PowerPoint PPT Presentation

Dec 28, 2022 106 likes •365 views

RETIREMENT OUTCOMES Hosted by the Prairie Regional Council May 22, 2018 Delta Hotel Regina Regina, SK RETIREMENT OUTCOMES Louis Martel Managing Director & Chief Strategist Greystone Managed Investments & John Hallett Retirement

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RETIREMENT OUTCOMES

Hosted by the Prairie Regional Council May 22, 2018 Delta Hotel Regina Regina, SK

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Prairie Regional Council

RETIREMENT OUTCOMES

Louis Martel Managing Director & Chief Strategist Greystone Managed Investments & John Hallett Retirement Strategist Sun Life Financial

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AGENDA

How Much do you need to Retire?
Plan Member Challenges
Plan Sponsor Challenges
All Plans Overview
What’s Next

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REPLACEMENT RATIOS It’s Personal

What to use?
50%
60%
70%
80%
?
None are accurate
Each individual is unique
And will have their own personal needs in retirement

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REPLACEMENT RATIOS How Much Do You Need

Starting Point
Determine Needs at Retirement
Start with what you spend now
What do you have now?
Existing Retirement Plans
Prior Retirement Plans
Personal Savings
Spousal Situation
On Track?
Savings Rate
Existing Savings
Savings Required
Conversion Factors

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REPLACEMENT RATIOS Needs at Retirement

Two Basic Types
Basic Requirements
Discretionary Requirements
Basic
Required Every Month
Need to start with these
Look at Current Spending
Discretionary
Some flexibility on some
Lots of flexibility on others
Individual has the choice to spend or not

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REPLACEMENT RATIOS Basic Needs

What to include
Food
Rent/Mortgage
Home Maintenance
Clothing
Child Expenses
Income Taxes – still have to pay
Clothing
Transportation
Healthcare

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REPLACEMENT RATIOS Discretionary Needs

What to include
Travel
Recreation/Entertainment
Tobacco, Alcohol
Gifts/Charity
Family Assistance
Savings
Education - personal

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20 40 60 80 100 120 Category 1

NEEDS AT RETIREMENT

Source: “The Essential Retirement Guide” by F. Vettese

20 40 60 80 100 120 Category 1

LOW INCOME UPPER/MIDDLE INCOME

Non-Personal Consumption 30% Personal Consumption 70% Personal Consumption 45% Non-Personal Consumption 55%

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20 40 60 80 100 120 Category 1

NEEDS AT RETIREMENT

20 40 60 80 100 120 Category 1

RENTER HOMEOWNER

Non-Personal Consumption 30% Personal Consumption 70% Personal Consumption 50% Non-Personal Consumption 50%

Source: “The Essential Retirement Guide” by F. Vettese

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20 40 60 80 100 120 Category 1

NEEDS AT RETIREMENT

20 40 60 80 100 120 Category 1

NO CHILDREN WITH CHILDREN

Non-Personal Consumption 35% Personal Consumption 65% Personal Consumption 45% Non-Personal Consumption 55%

Source: “The Essential Retirement Guide” by F. Vettese

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CHALLENGES

Plan Member Challenges
Plan Sponsor Challenges
Defined Benefits Challenges
Defined Contribution Pension Challenges
Other Capital Accumulation Plan Challenges

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PLAN MEMBER CHALLENGES

Determining Personal Needs
Discipline
Awareness
Monitor and Adjust

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PLAN SPONSOR CHALLENGES

Develop target replacement ratio
Integrate with social programs (CPP/QPP and OAS)
Monitor and benchmark your target
Communicate to plan members
Engagement and Education of plan members
Take a holistic point of view
Planning Tools
Plan Flexibility
Permit voluntary contributions
Permit Transfers in
Spill over account

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DEFINED BENEFIT CHALLENGES Considerations

Pensionable Earnings
Include all compensation (i.e. overtime, bonuses etc.)
Full or Part Time Employment
Part time may not be prepared
Holistic Point of View
Commuted Values
Now just like a Capital Accumulation Plan
Options at Retirement
What assistance is provided
Again Holistic point of view
Additional Savings
Group RRSP/TFSA considerations

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DEFINED CONTRIBUTION PENSION CHALLENGES Considerations

Any focus on income
Is wealth accumulation still the focus?
Full or Part Time Employment
Part time may not be prepared
Education on Investments
Especially as they approach retirement
Options at Retirement
What assistance is provided
Conversion is not an easy task
Again Holistic point of view
Additional Savings
Group RRSP/TFSA considerations

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OTHER CAPITAL ACCUMULATION PLANS CHALLENGES Considerations

Same as DC Pension Plans, plus
Focus on Retirement
Is it a Retirement Program or not?
Withdrawals
In plan while employed
Savings Account or a Retirement Plan

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WHAT’S NEXT

Focus on Income
Education
Retirement Readiness
Communication

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WHAT’S NEXT Focus on Income

These are retirement programs
People understand income and retirement ages
What does a pot of money mean at retirement?
More Engagement
Easier to discuss day to day expenses
Investments not as easy to understand
Options at Retirement
So many choices
Unengaged definitely need assistance

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WHAT’S NEXT Education

Plan Members need help
Holistic Point of View
Need to look at their total needs
Financial Wellness
Addresses one concern
One less stressor for employees
Focus on income may help now – look at budgets
Planning Tools
Easy to understand
Focused on income
Encourage people to utilize

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WHAT’S NEXT Retirement Readiness

Should be a focus for any plan
Compare to your target replacement ratio
Shock employees now – not at retirement
Statements – remind employees how they are doing
Many suppliers can provide this
Determine how much detail you require
Workforce Management
Employees retire on time
May not feel they NEED to continue working
Benchmarking
More to retirement plans than investments or funded status
Develop your own and monitor
Stay focused on retirement readiness

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WHAT’S NEXT Communication

Retirement Income
Money is personal to individuals
Easier to understand than investments
Engagement
Easier to engage plan members
It’s their goal to retire, so have an interest
Start Early
Younger workers are already focusing on this
Most common complaint at retirement – why didn’t you tell me sooner
Trust
Plan members trust their employers
More than financial institutions
More than financial advisors
Build on this trust and help them

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WHAT’S NEXT

As a program sponsor, what is my position on the:
Vision
Main objective
Plan design
Education
Communication
Program assessment

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Prairie Regional Council

THANK YOU

Louis Martel Managing Director & Chief Strategist Greystone Managed Investments & John Hallett Retirement Strategist Sun Life Financial

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