Poll Reveals Financial Myths Believed by Candians

Poll Reveals Financial Myths Believed by Candians

A recent TD poll is revealing that Canadians have a variety of misconceptions about their finances for retirement. The misconceptions range from when they should start saving money to the amount they’ll need to live. “While planning and saving for retirement is different for everyone, there are some basic fundamentals to keep in mind with respect to things like when to start saving, how much you need to save and weathering the stormy markets,” says Crystal Wong, Senior Regional Manager, TD Waterhouse Financial Planning in a news release.

“An important starting point is to determine what your ideal retirement lifestyle is like, then set financial goals and work with an advisor to develop a comprehensive plan to help you attain those goals. This will help you feel more confident about your financial future.”

One of the myths held my Canadians is that you should eliminate your debt before saving for retirement. Sixty-three percent of Canadians believe this, but Wong says it’s not true. “Retiring without any debt may not be realistic for some Canadians. It’s important to pay down as much debt as possible before retiring, but it’s also essential to strike a balance between reducing debt and saving for retirement,” says Wong. “The first step is to review your current financial situation and your retirement goals. This is where an advisor comes in. They can help you formalize a financial plan that works towards eliminating your debt, starting with any high-interest debt, so you can get on the right track for your financial future.”

Another common myth believed by 42% of Canadians is that putting money only in guaranteed investments is the safest way to handle your money during the downturn. “The reality is there will always be fluctuations in the markets, but that doesn’t mean you should sell and run. In times of market volatility it’s essential to stick to your plan and not react emotionally,” says Wong. “Just as saving for retirement is a long-term process, having your money in the equity market is a long-term investment. An advisor can help you determine the right asset allocation for your portfolio, which will optimize potential returns without exposure to inappropriate levels of risk.”

Nearly half of Canadians believe that your expenses will drop as you get older, but Wong says that may not be true because of increased health care needs. “Despite the fact that our expenses may decrease as we enter our retirement years, recent surveys of retired Canadians have told us that their daily expenses are higher than they anticipated. This may be because they haven’t taken into account everyday expenses such as dental and health care, or unforeseen expenses such as accidents or home repair,” says Wong. “You should work with an advisor to estimate what your expenses will be in retirement, and calculate to ensure that you are saving enough now to pay for these future expenses when you probably will not be generating as much income.”

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