Canadian investors consider their retirement income needs from a monthly perspective, not an annual figure or lump sum dollar amount as commonly used in the financial planning industry, a new study finds.

“Financial planners have traditionally worked with investors towards a yearly income stream goal,” explained Tina Di Vito, vp and managing director, retirement planning, BMO Nesbitt Burns. “Our survey results question this approach, showing that the average investor looks at income stream from a monthly perspective, with the average goal for retirement being a monthly income of $3,500.”

According to the BMO Retirement Trends Study, 66% of respondents who have a dollar figure in mind for retirement needs consider retirement income from a monthly perspective.

Only a quarter of those who have a dollar figure in mind for retirement needs (24%) consider retirement funding from an annual income stream perspective, with $54,700 a year as the average. A very small proportion (8%) had a lump sum in mind, with $649,500 as the average amount.

“Breaking retirement income down into monthly bundles is ultimately a much more practical and tangible way for pre-retirees and retirees to conceptualize how they’re going to fund their lifestyle in retirement,” said Di Vito.

The study also illustrates that the 45-and-older cohort is not a homogenous group. There is a segment that feels prepared, optimistic and ambitious about the next stage of their life. The other group feels they may not be as prepared and need to make some adjustments, such as a longer transition period between work and ‘active retirement’.

“These results truly reinforce the fact that retirement is changing, and that financial institutions need to change with it,” said Di Vito.

“Retirement is no longer a hard stop, where we shift from getting a pay cheque to getting a pension cheque or drawing from a lump sum investment. It’s often a transition between full-time work and an active retirement.”

To provide a customized snapshot of what that transition stage could look like, BMO Financial Group has created an online tool available at www.bmo.com/retirementyourway.

Individuals input their current age, the age that they want to retire, how much their current retirement savings are, and then they adjust all of the variables to determine how long that transition phase between full-time work and active retirement will be.

The Ipsos Reid/BMO online survey conducted from Oct. 21 to Oct. 27, 2005. For the survey, a randomly selected sample of 5,325 financial decision-makers age 45 or over with at least $25,000 in financial assets completed an online survey. With a sample of this size, the results are considered accurate to within (+/-) 1.34 percentage points, 19 times out of 20, of what they would have been had the entire Canadian population of 45 years or over with at least $25,000 in financial assets been polled.