According to a study from the BMO Retirement Institute, roughly a third of baby boomers approaching retirement are rethinking their target date in order to assure themselves of a steadier income once they do leave work.
In fact, some retirees may be forced to return to work or risk running out of money, BMO's research suggests. With their nest eggs battered, 41 per cent of those who've already retired intend to head back to the office within the next year.
And they're all probably wise to do so, suggests financial planner and author Jim Otar. In his gloomy new book, Unveiling the Retirement Myth, Otar argues that too many boomers are ill prepared for retirement and should plan on keeping their jobs for a few more years.
As well, most people plan for an unrealistically short retirement, forgetting how long they might live, he maintains. Add a dose of inflation to that and you're really in trouble.
Some lucky individuals are in what Otar calls the "green zone" where there should be enough money tucked away to see you through good and bad times and still be able to maintain your current lifestyle.
However, he adds, there are more and more older workers in the "red zone" who — either through lousy savings habits, the lack of a decent pension plan or a poor understanding of life expectancy — are likely to come up short in retirement. And the sooner they realize this, the better chance they'll have of doing something about it, he maintains.
Unfortunately, many of the rules of thumb used by advisors to market savings vehicles like RRSPs don't work for retirees trying to create income. That's why proper retirement planning means focusing on potential adverse outcomes and worst-case scenarios, says Otar, who adopts a very mathematical approach in this book.
* Video: Why working longer before retiring may not be a bad thing
Nonetheless, according to Laurence Kotlikoff, a Boston University professor and author of Spend 'Til the End, many people are not nearly as bad off as they think. In fact, he says, what often passes for retirement planning is little more than an industry scare campaign that doesn't really help anybody.
He suggests the preferred strategy is for individuals to study their own situations so they can understand how their particular spending will affect their standard of living, before and after retirement.
The basic problem with most retirement planning tools is that they makes some dumb assumptions, Kotlikoff maintains, including the fact that the spending you do before retirement will continue right through to your nineties. By that he means all the money you spend on your kids, as well as all those car and mortgage payments you've been making.
