Stephen Poloz: Adjust Retirement Plans, Low Interest Rates Stays

Canadians must be prepared to rearrange their retirement expectations while proceeding with “ultra-low” interest rates, said the governor of the Bank of Canada. In comments arranged for a speech on Tuesday to economists and individuals in finance in Quebec, Stephen Poloz said that interest rates can by and large mean higher costs for stocks and bonds, and lead to higher values for real estate.”I realize this may be cold comfort to those people who have to adjust retirement plans to a lower-for-longer world,” Poloz said. “But the difficult reality is that savers must adjust their plans.”

“I realize this may be cold comfort to those people who have to adjust retirement plans to a lower-for-longer world,” Poloz said. “But the difficult reality is that savers must adjust their plans.”

“There are no easy answers, particularly for some who have already retired,” Poloz said.The bank’s benchmark interest rate, however, has remained at a low level of 0.5

The bank’s benchmark interest rate, however, has remained at a low level of 0.5 percent for more than a year and it’s not expected to start climbing anytime soon. To ensure an adequate retirement, Poloz suggested Canadians consider saving more, working longer than planned and changing their investment mix to adjust to the persistently low-interest rates. The need is compounded by the fact Canadians are living longer.

“It is quite evident that our economy is still facing strong headwinds, and we need stimulative monetary policy to counteract them and move us closer to full capacity,” he said in his prepared remarks. “We also need to watch the full effects of the government’s fiscal stimulus unfold.”The central bank head said that could mean a combination of putting aside more funds, working a little longer than planned or changing their investment mix.

The central bank head said that could mean a combination of putting aside more funds, working a little longer than planned or changing their investment mix.