10/11/2013 05:35 EDT | Updated 01/25/2014 04:01 EST

How Do You Imagine Your Retirement if it's 30 Years Away?

How do you envision your retirement? Do you see yourself as being rich or poor? Will you be self-sufficient or financially dependent on someone else?

I imagine that for most retired (or nearly retired) people, you'll have a better idea of what life will be like; but what if you're 20 or 30 years away? I think most people in that age group would have a harder time giving a confident response.

When I started in the financial services industry in 1979, a lot more people had access to defined benefit pension plans in addition to Canada Pension Plan and Old Age Security. Today, more and more people are left trying to figure it out themselves, with little to no help from the government or their employer.

Since 1979 many of those defined benefit pension plans have been replaced by defined contribution pension plans. This effectively shifts the burden of risk away from the employer and onto the employee. In the past, if you wanted to be sure about your pension plan you went to work for the government. Even that is uncertain now.

Right now, the Alberta government is looking at doing a major overhaul on their public service pension plan in order to reduce their future costs. Other provinces have or are considering similar changes. That which used to be seen as sacred, doesn't appear to be sacred anymore.

One of the key issues with all retirees is inflation. If you're on a fixed income, inflation can be the invisible thief. It steals from you as long as you live. If you're talking about an inflation adjusted pension plan, any inflation over and above what is estimated for the pension will end up adding substantially increased obligations by the employer. That's why one of the key changes proposed in Alberta is to reduce the cost of living adjustment to 50 per cent of the Alberta inflation rate. You see, the future is so uncertain that even governments are afraid.

There has been much talk about increasing the age of entitlement for Canada Pension Plan (CPP) to 67. Changes are already underway to reduce the benefits from CPP for those who retire early and enhance the benefits for those who wait. I think this makes sense because people are living longer. But where is all this taking us?

My father retired in 1979 and died last year. At the time of his death he was collecting more income each month from pensions than the amount of money he earned while he was working. This is entirely due to his pension income increasing with inflation and providing him with consistent purchasing power throughout the years of retirement. To be clear, I'm not talking about investment income; I'm talking only about a defined pension plan from his employer, along with Canada Pension Plan retirement benefits and Old Age Security. If the indexing were reduced (as proposed in Alberta), he would not have had anywhere near the same retirement lifestyle.

More and more people will be going to a well that is draining faster and faster. The "system" isn't a bottomless well. Even Alberta, with all its magnificent wealth, recognizes this.

I'm not writing to debate pension reform, I am writing to bring attention to the fact that government benefits are not as set in stone as they once were. If you haven't retired yet and you're still working, my advice is control your destiny as much as you can. Don't think that your employer or your government is going to be there to take care of you, because there's a good chance they won't.

When it comes to a financially healthy retirement think in these terms...

If it is to be, then it's up to me.

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