Poll highlights some unrealistic expectations many Canadians have about retirement planning
According to a recent poll, many Canadians may be setting themselves up for an unexpectedly difficult retirement. The Toronto Star reports that 40 percent of Canadians polled by BMO Financial Group said they expect an inheritance to help fund their retirement, while other respondents were relying on even less reliable sources of income.
Many hope to win the lottery
Perhaps most concerning is that 34 percent of Canadians are counting on the lottery as a source of income during retirement, with 14 percent of respondents saying they are "relying heavily" on such an outcome. In B.C. the rate was even higher, with an alarming 41 percent of B.C. residents reportedly hoping for a lottery win. As Chris Buttigieg of BMO Financial Group warns, the odds of winning the lottery are about 1 in 14 million, meaning most of those respondents could be in for a rude awakening during their later years.
Also troubling is that 31 percent of respondents plan to rely heavily on the Canadian Pension Plan, even though the average monthly payout from the CPP is only $600. Buttigieg points out that the CPP should only be relied upon as supplementary income as it is unlikely to entirely cover most retirees' expenses.
Why people shouldn't rely on inheritance
Many of the 40 percent of respondents who expect an inheritance to help cover their retirement are also likely to be disappointed. With the average life expectancy in Canada continuing to rise and the payouts from CPP being quite limited, some people could find that their inheritance is much smaller than they expected.
Furthermore, lack of communication is a perennial problem when it comes to drawing up wills and planning for an inheritance. While many people assume they will receive a large inheritance once a parent or spouse passes away, in some cases those same people could find that their share of an estate is less than they had hoped for.
Talking about inheritance
Even though it may seem intuitive to discuss the terms of a will with your children or other beneficiaries, in some cases this could lead to tension and pressure from disappointed or greedy beneficiaries. If the parent has a close and open relationship with his or her children, then discussing the will may not be problematic. However, if the relationship is strained, tense or unbalanced, discussing a will may lead to further problems during and after the lifetime of the parent.
When making a will, people should always seek legal counsel from a reputable wills and estates law firm. A lawyer experienced in wills and estates law can guide clients through the intricacies of the law and help to make sure that a will is legally sound and less prone to being challenged in the future.