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the big save

Just as self-service checkouts have become commonplace in large supermarkets, do-it-yourself options have grown in the retirement planning field.The Globe and Mail

Now that we pump our own gas, book our own travel and quite often check out our own groceries at the supermarket, planning your retirement is becoming a big self-serve item, too.

Many forces are pushing and drawing Canadians toward working out their own destinies. They include the decline of defined benefit pension plans, the closing and consolidation of bank branches, the rise of online and mobile banking and the increasing ease and lower costs of self-serve investing in general.

The platinum pension continues to disappear. Between 2002 and 2012, the number of Canadians in the private sector enrolled in registered pension plans declined from 27 to 23 per cent, and the number of private-sector workers who enjoyed defined benefit pension plans dropped precipitously from 73 to 48 per cent.

"I look at a company like Sears, where my dad worked, which had the blue-chip standard for pensions in the 1980s," says Doug Carroll, practice lead for tax and estate planning with Meridian Credit Unions in Toronto.

No more, though – Sears Canada Inc. went bankrupt this fall, leaving a $270-million shortfall in the pension plan that covers some 18,000 employees.

Mr. Carroll says he feels for people who are just into retirement, or about to get there, only to find out what they signed up for is not what will be delivered.

Meanwhile, banks continue to consolidate and close branches, while pouring money and resources into increasingly sophisticated online services. Earlier this year, CIBC said it expects to close about 100 of its bricks-and-mortar locations by 2019, going from 1,100 to 1,000 facilities; Scotiabank closed 80 locations between 2015 and early 2017 and said it planned to close another 5 per cent of its fewer than 1,000 remaining sites.

"More and more Canadians are looking for online alternatives to their old bank," says Neville Joanes, chief investment officer of WealthBar, a British Columbia-based online and mobile service that includes robo-advisors to help investors pick funds for their retirement.

In February, the Canadian Bankers Association reported that more than two-thirds of Canadians (68 per cent) used online or mobile banking as their primary means of banking. And in March, Investors Economics Inc., which provides research and analysis to the financial sector, said that online brokerage accounts had grown 4.6 per cent during the previous five years, compared with 1.2 per cent for full-service brokerages.

There are pluses and minuses to taking care of your own retirement via your laptop, tablet or phone, says Markus Muhs, investment advisor and portfolio manager at Canaccord Genuity Wealth Management in Edmonton.

"People are more on their own, more responsible for their own investment decisions, and a major downside is that individuals generally don't possess the know-how or cost-efficiencies of giant pension plans," he says.

"People also have the tendency to look past a deduction on their paycheques for pension contributions, but require some motivation to start a saving strategy themselves," Mr. Muhs adds.

"On the plus side, managing your own pension lets you manage that money for your own time horizon, not collectively for the income needs of current retirees."

The growth of do-it-yourself retirement planning and management is also leading to more choices in where people can go for advice, Mr. Muhs says.

"It is possible to do your own retirement planning if you commit the time and resources, but you could work with someone who does retirement planning, such as a financial planner," says Sandra Foster, Toronto-based financial author and president of Headspring Consulting Inc.

"No one cares about your money as much as you do. You can start by doing some financial projections to estimate how much you need to save to fund your retirement," Ms. Foster says.

"If you don't have the money the projection indicates needs to be saved, you then have to decide if you will work longer, determine if you will need less money to fund your retirement, or find some way to save more. Don't forget to redo these projections every two or three years to help you stay on track."

Ms. Foster also recommends using online tools such as the Canada Pension Plan's free retirement income calculator. Mobile and online investing services such as Mr. Joanes' WealthBar also augment their robo-advisory services with access to the firm's certified financial planners.

"Our clients get a dedicated financial advisor, who helps build them an interactive online plan up to age 100. Our online planning tools and advice are also accessible to all clients, regardless of the amount they invest with us, whether it is $1,000, $50,000 or more," Mr. Joanes says.

Mr. Muhs adds, "there are a growing number of financial planners outside of the banks available to help you plan. Financial planners are also able to offer their services in a number of diverse compensation models."