Your parents had it easy - at least when it came to retirement. Big salary increases, fat company pensions and a general frugal disposition made saving for their golden years a relative cakewalk. Retirement is going to be a whole lot more complicated for baby boomers, particularly those at the tail end of the generation. They're going to live longer and require more money than their parents. Chances are, they'll continue working after age 65, they won't have a sizable pension to rely on should they choose to stop working, and they may even have a freeloading kid to put through college, or an aging parent to support. On top of all that, they'll likely carry debt into retirement, and struggling to pay off that mortgage has left their RRSPs starved for cash.

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Sounds scary, doesn't it? Certainly, a lot of the advertising around retirement planning is designed to frighten boomers into action - a fear exacerbated by a flurry of surveys indicating that Canadians are woefully unprepared to stop working. That becomes a major issue for everybody, given that boomers make up approximately one-third of Canadians, and the first wave of them turns 65 in 2011. Two-thirds of Canadians expecting to retire by 2030 are not saving enough to meet even basic living expenses, according to a study released in May by the Canadian Institute of Actuaries, which recommends everybody over 40 start contributing at least 15% of their annual gross income to an RRSP. "I don't think people really have an understanding of just how much retirement is going to cost them," says Jonathan Sceeles, a certified financial planner with Edward Jones in Toronto.

Such fear may be necessary to force Canadians into saving for retirement, but it usually turns out to be overblown. Financial planners say clients are often pleasantly surprised when they learn how much they're worth. Even the new realities of retirement - everything from declining corporate pensions to increasing debt - are not insurmountable if a plan is made in advance. There are often overlooked sources of income, strategies to mitigate risk to your portfolio and ways to leverage real estate, all of which will determine if you're financially secure enough to live your ideal retirement.

The first challenge is working up the courage to look at your finances. "There's a lot of pent-up anxiety around retirement," says Patricia Lovett- Reid, senior vice-president of TD Waterhouse. "It's simply fear of the unknown. But it's better to confront it sooner rather than later." Although Lovett-Reid sees clients who have put off retirement planning until they're 60, she recommends people start by at least 40, preferably even earlier. The goal is to establish how much income you'll need each year to live comfortably in retirement, but you shouldn't put much faith in the old rule of thumb that you'll need 70% of your current annual income. "I find it completely useless," says Ted Rechtshaffen, president and CEO of TriDelta Financial Partners in Toronto.

Each person's lifestyle and financial situation is different, so blanket statements about retirement income don't have much value. Expenditures do tend to fall in retirement, but spending shifts take place gradually. Rechtshaffen says people can spend just as much in early retirement as they did before, if not more, as they treat themselves to vacations and other luxuries. Spending falls after that, but may pick up again if someone's health worsens, requiring long-term care or a permanent move to a retirement home.

Determining how much income you'll need is actually the easy part, say planners. Setting that money aside is when the problems start. Sceeles says clients are typically daunted when they find out how much of their income they have to squirrel away in an RRSP. He recommends at least 10% of your income each year by the time you're 40, but having the discipline to do so is difficult for a lot of younger boomers. "We've seen so many people 10 years older than us with a surplus of cash and a fancy lifestyle," Sceeles says. "We thought we had to mimic all that." Clients compensate by saving less money than they should each year, with the intention of increasing it later. Those increases rarely happen, Sceeles says.

Falling behind is particularly dangerous now that corporate pensions are less robust. Ten years ago, slightly less than 43% of paid workers participated in a pension plan; that number has since dropped to 38.5% and shows no sign of reversing. The nature of pensions is changing, too, with more corporations switching from a defined benefit model to a defined contribution model, putting more responsibility on the individual to contribute money to the plan. Defined contribution plans also offer little or no protection against inflation, which can eat away at a retiree's savings. Older boomers may have caught the tail end of the defined benefits era, but younger boomers aren't so lucky.

The decline in corporate pensions may be worrying, but it shouldn't throw boomers into despair. Rechtshaffen says people are too quick to discount the value of the Canada Pension Plan and old age security. A couple that has lived and worked in Canada most of their lives can pull in around $30,000 a year from these government programs alone, he says. Other financial advisers caution against relying on the government, however, and exclude CPP from clients' plans. The sheer number of boomers moving through the system at once, combined with the comparatively small number of younger Canadians making payments will put tremendous strain on the CPP and OA S. "I don't believe in making people fearful, but if you plan on that being your retirement income, you're going to be sorry if it's not there," Sceeles says.

The solution is to put more money into an RRSP or equities, depending on your age. The farther away from retirement you are, the more heavily invested your portfolio should be in growth-oriented equities. While plenty can be written about designing the perfect retirement portfolio, Lovett-Reid at TD prefers a mix of 20% in fixed income, 20% in Canadian stocks, 30% in U.S. stocks and the balance in international stocks. Regardless of a portfolio's contents, each one is subject to what financial planners call "stream of return" risk. Market performance during the two or three years surrounding a person's retirement date can have a huge impact on the value of your equity investments. Retiring during a bear market, even a modest one, can rapidly deplete your savings, because your portfolio may not be generating any positive returns, and yet you've started to draw from it. One way to reduce this risk is to gradually move money out of equities and into fixed-income products, such as RRSP, bonds or GIC s. Sceeles recommends that at age 40, approximately 40% of your savings should be in fixed income and the rest in equities. The reverse should be true by age 60, so your market exposure is reduced.

Of course, savvy boomers shouldn't rely exclusively on equities - real estate is becoming an increasingly popular source of retirement revenue, and selling isn't the only way to tap into home equity. For example, a reverse mortgage allows homeowners to receive up to 40% of the home's current value, tax-free. Interest on the loan is typically paid annually and the full amount is not due until the death of the last surviving spouse, or until the homeowner moves. Given the upward trend in real estate prices, the loan should pay for itself upon the sale of the house in most cases, says Rechtshaffen. "There are a lot of people heading into retirement who have a huge amount of real estate equity and don't even consider the possibility that it's money they can use," he says.

People generally take out a reverse mortgage late in retirement, and only if absolutely necessary. That thinking will change as attitudes toward debt change, says Mike Reed, head of retirement client strategies at RBC Financial Group. "Canadians have an aversion to debt, but what we're seeing is that aversion is starting to be overcome," he says. Indeed, boomers might be a little too comfortable with debt. A Bank of Montreal study found that 68% of pre-retirees expect to carry debt into retirement. "In your 50s, you should aggressively be looking to retire debt," says Lovett-Reid. That might mean spending less, downsizing the house or car, or even preparing to work longer.

Quickly paying off debt isn't always possible, especially when it's a mortgage, but it is possible to pay down a mortgage while still contributing to an RRSP. Doing so depends on interest rates, mortgage rates and your own financial situation, but, says Sceeles, "You're going to get a better bang for your buck holding your mortgage as it is and putting every additional dollar into your RRSP" given today's interest rates. For each dollar you put into your RRSP, you can receive 30 cents back in tax relief, depending on your income tax bracket. "It may not make sense to pay off your mortgage too quickly," he says.

Any strategy to boost your savings heading into retirement is worth investigating, since you'll have plenty of time and financial obligations, such as caring for elderly parents. A BMO study found that 34% of boomers already provide assistance to an aging family member, and a quarter of those have had to change their retirement plans as a result. Preparing for such a possibility requires a difficult conversation with your parents about their financial situation, health and long-term care needs. You must determine the viability of a parent continuing to live at home, as well as attitudes toward in-home care, retirement residences and even moving in with you. The financial implications must also be factored into your own retirement plans. However delicate such a conversation may be, it's important to work through these issues early on. After all, your life will also be affected - where you live, your finances and your ability to keep working.

With so much focus on the financial aspects of retirement, it's easy to overlook the question of how you'll actually spend your time. Certainly, more Canadians are continuing to work after 65, either by choice or financial need. Slightly less than 60% of Canadians over 45 plan to work for an employer after retirement, usually in part-time or consulting positions. But even if you continue to work in some capacity, you'll probably have more free time than you did before. According to Desjardins Financial Security, a large majority of pre-retirees feel it's important to plan a social life after retirement, but only 55% have actually done so. "We plan for retirement like it's a 30-year long weekend," says Barry LaValley, founder of the Retirement Lifestyle Center, a research company in Nanaimo, B.C. Even your most cherished leisure activities can lose their lustre after years of doing nothing else.

When pre-retirees are asked how they would like to spend retirement, travel tops the list. "They may travel for four months, but they've given no thought whatsoever to what the other eight months will look like," LaValley says. Boredom, lethargy and a sense of no longer being useful can set in, especially for go-go boomers. On the flip side, many people think they will do all of the things they never had time to do before. There are exceptions, but LaValley says most boomers will not become new people in retirement. "You are who you are from the time you're born," he says. "If you're not doing something prior to retirement, it will be extremely difficult for you to do it after retiring." That's not to say people shouldn't try new things in retirement; rather, boomers should have realistic expectations. "You're going to hear a lot more about people having a first retirement, a second retirement and maybe even a third retirement," says Lovett-Reid, who finds clients are returning to work soon after retirement, only to retire again.

There is no definitive way to deal with retirement, but LaValley says you should start thinking about the aspects of work you like (even if you don't particularly care for your job) and how to integrate them into your post-career life. The sociability of work can be found by joining clubs and community associations. Structure can be compensated for by scheduling regular appointments and activities to keep your life orderly. A loss of identity and status is particularly common for men, and while returning to the workforce is an option, so is volunteering or joining a board of directors. The answers are different for everyone, but the point is to start thinking about them to avoid floundering later on.

And don't forget to communicate your plans to your family members, especially your spouse, since they can have different priorities. Reed recalls a couple who moved to Orlando, Fla., assuming their children and grandchildren would visit. After two years, no one had made the trek south. Mistakes like that can be avoided with proper planning. No one wants a boring, lonely retirement. Even a young Paul McCartney realized that way back in the '60s when he wrote "When I'm Sixty-four," which offered a satirical vision of retirement involving knitting sweaters and Sunday morning strolls. "Doing the garden, digging the weeds / Who could ask for more?" he sang.

You'll ask for more. You just have to figure out what you'll be asking for.