By Sheryl Smolkin
Findings from Sun Life’s 2015 Canadian Unretirement Index released earlier this year received extensive media coverage. The seventh report in an annual series tracks how workers’ attitudes and expectations about retirement are evolving in response to economic, health and personal factors affecting their lives.
The question central to the ongoing study is “Will you be working at age 66?” This year for the first time, more Canadians expect to be working full time at age 66 (32%) than expect to be fully retired (27%).
As indicated in past years, those who plan to work past 65 fall into two camps. Forty-one percent say they’ll do so because they want to while 59% feel they will need to. The gap between the two has been gradually widening since 2011 but closed significantly this year. In addition, another 27% say they will be working part-time, while 12% aren’t sure.
Nevertheless, on average, Canadians say they expect to retire at 64. That’s the lowest figure reported since 2009. Canadians anticipate working past 65 – either by choice or necessity – but that trend is offset somewhat by a significant number who expect an early retirement.
Compared to current retirees, working Canadians are two and a half times more likely to believe they are at “serious risk” of outliving their retirement savings. The actual average retirement age among current retirees was 61 and a whopping 88% retired before age 66. They intended to retire early (at 62 on average) and for the most part, they did so.
But their experiences differ markedly from today’s workers. Three-quarters (76%) benefited from a workplace retirement plan (68% had their own and another 8% were married to a plan member). By comparison, just 68% of working Canadians have a workplace plan (55% have one of their own, 13% will benefit from a spousal plan).
Retirees are significantly more confident about their government pensions (94% vs. 72% among working Canadians); their government-funded prescription drug benefits (82% vs. 68%respectively); and their employer pensions (71% vs. 65% respectively).
Indeed, working Canadians are more likely to be “not at all confident” than retirees about:
- Having enough money to enjoy the lifestyle they want: 36% working Canadians vs. 20% retirees.
- Having enough money to pursue their hobbies and interests: 33% working Canadians vs. 17% retirees.
- Being able to take care of medical expenses: 28% working Canadians vs. 11% retirees.
- Being able to take care of basic living expenses: 19% working Canadians vs. 5% retirees.
Nearly two-thirds (63%) of retirees are very/somewhat satisfied with their retirement savings. Only 44% of today’s workers say the same. When it comes to outliving their retirement savings, 55% of today’s retirees are unworried, 31% are unsure and 14% are worried. Contrast this with 30% of workers who say they are unworried. One-third (35%) are unsure and 36% are worried.
It makes sense that current retirees would answer more positively about retirement planning. Many of those who did not achieve their financial goals have adjusted accordingly. But clearly, there is more to this story.
Today’s workers have experienced a prolonged period in which low interest rates, volatile capital markets and a drop in employer-funded retiree benefits have combined to make retirement planning more challenging.
More than ever, working Canadians have to plan, save and take full advantage of whatever plans their employer provides. The onus is on the individual to an extent current retirees did not experience. It is also on the financial services industry to support consumers with investor education and innovative product design.
All Canadians over age 18 are eligible to participate in the Saskatchewan Pension Plan which is a defined contribution plan with a fund return history of 8.2 % since inception (29 years) and 9.1% in 2014.
You can calculate your own personal Unretirement Index score, which measures your outlook on retirement, at www.sunlife.ca/unretirementindextool. My score is that I am “Clear and sunny, fully confident in my retirement and the countdown is on.” Since I was born in 1950, that’s not surprising. But I will probably be one of those people still working at least part time at age 66, not because I need to, but because I love my job.
Also read: More people planning to work beyond age 65