{"id":19380,"date":"2020-08-27T15:15:33","date_gmt":"2020-08-27T19:15:33","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/employees-must-accumulate-10-9-times-final-pay-to-maintain-income-in-retirement-report-149336"},"modified":"2020-08-27T15:15:33","modified_gmt":"2020-08-27T19:15:33","slug":"employees-must-accumulate-10-9-times-final-pay-to-maintain-income-in-retirement-report","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/08\/27\/employees-must-accumulate-10-9-times-final-pay-to-maintain-income-in-retirement-report\/","title":{"rendered":"Employees must accumulate 10.9 times final pay to maintain income in retirement: report"},"content":{"rendered":"
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Staff <\/span> | August 27, 2020 <\/p>\n

The average Canadian employee will have to accumulate 10.9 times their final pay to maintain the same spendable income once they retire, according to a new report by Aon.<\/p>\n

The report defines retirement income adequacy as having the same spendable income after retirement as before, taking into account changes in savings, taxes, medical expenses and other factors. It compares the anticipated accumulation of retirement savings (as a multiple of final pay) to the target accumulation required to maintain an employee\u2019s standard of living after retirement.<\/p>\n

\u201cThe retirement readiness gap is real for Canadian workers,\u201d said William da Silva, senior partner and Canadian director of retirement solutions at Aon, in a press release. \u201cThis is an opportunity for employers to ask the right questions: Are contribution levels appropriate and designed in alignment with the plan sponsor\u2019s objectives? Are employees equipped with resources to manage their finances and plan for their retirement? Do employees understand the impacts of medical cost inflation and other post-retirement expenses? Clearly, there\u2019s a need to look both at the substance of workplace retirement programs and at the \u2018soft\u2019 levers of education and information.\u201d<\/p>\n

Read: Retirement system must reflect Canadians working longer: report<\/a><\/strong><\/p>\n

The report also found, on average, Canadian employees must save 16 per cent of their annual pay in workplace and personal retirement plans every year from age 25. In the absence of personal savings, the average Canadian <\/span>will come up short against the 10.9 times pay goal, it said, noting they\u2019d have to delay retirement to age 70 to be financially ready to retire and maintain the same net available income after retirement or lower their standard of living by about 30 per cent to make up for the savings shortfall.<\/p>\n

\u201cEvery employee has unique circumstances and how much an individual should save ultimately depends on their own goals and resources,\u201d said Rosalind Gilbert, senior actuary and associate partner in retirement solutions at Aon. \u201cCanadian employees have clear expectations that their employer should provide increased support for their overall financial well-being and capital accumulation plan sponsors are focusing on areas that are well-aligned with this objective. The [report] arms employers with analytics to identify the overall retirement readiness of their workforce and identify strategies to address employee needs.\u201d<\/p>\n

Read: 2020 CAP Member Survey webinar: Challenges ahead<\/a> <\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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