Aug 2: BEST FROM THE BLOGOSPHERE
August 2, 2021
COVID did a number on the retirement rate, but it’s climbing again
One unexpected side effect of the pandemic was a dampening of people’s plans to retire.
According to new research from RBC, covered in a story from CTV News, there was an unexpected drop of 20 per cent in the retirement rate last year – likely due to COVID-19.
RBC’s Andrew Agopsowicz tells CTV that the dip “was likely a result of uncertainty about retirement savings as the pandemic arrived.”
“It’s what held people back,” he affirms in the story.
But – perhaps an indicator of better times ahead – retirements are starting to return to normal levels, he notes.
“The return to normal could be a good period for people to make a decision they were probably going to be making (anyway),” Agopsowicz states in the story.
There has been a general rise in retirements over the last decade as the boomer generation hits age 65, the story notes, and “that trend will continue for several years.”
A fringe benefit of the boomers getting out of the workforce may be “a near-term labour shortgage for some types of jobs,” Agopsowicz tells CTV. This will be due to a trifecta – boomer retirements, a low national birthrate, and lower levels of immigration, the story states.
In mid-July, CTV reports, Statistics Canada reported that the Canadian economy added 230,700 new jobs, “as restrictions put in place to slow the pandemic were rolled back across the country.”
Savings may have to last a long time
If you are among those planning to log out for the last time in 2021, Money Control outlines some of the steps you may want to consider to ensure your retirement stash isn’t exhausted before (ahem) you are.
Most retirees will live beyond age 85, the article notes. “We could live for up to 30 years or more post our retirement… (and) women live longer than men,” the article states.
With that in mind, you should plan for your investments to outperform inflation, the article says. If you can’t get there with fixed-income investments, “investing in equity will give you long-term growth; in between, there will be volatility.”
So, putting these two bits of information together – the stampede towards the workplace exit for boomers will soon resume its normal pace. The nest eggs boomers have built, and that younger folks are still building, will need to last for maybe 30 years. And while conventional wisdom suggests that the older you are, the less exposure to risky equities you should have, inflation hasn’t been a factor for a while but could one day reappear.
One answer is a “balanced fund” approach, where experts position their fund with exposure to both fixed income and equity, making strategic moves in advance of emerging trends. A great example is the Saskatchewan Pension Plan Balanced Fund, which has produced an average rate of return of eight per cent since its inception 35 years ago. While past returns aren’t a guarantee of future performance, the idea of having someone else decide when to get in or get out is a sound one – you can instead focus on your golf game or line dancing steps. Check out SPP today.
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.
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