May 23: BEST FROM THE BLOGOSPHERE
May 23, 2022
Newly-minted retirees finding golden years expensive, thanks to inflation
Writing in the Financial Post, Victoria Wells reports that new retirees – who jumped ship on work due to the pandemic – are finding their golden years more expensive than they expected.
She notes that many folks left their jobs earlier than planned due to COVID-19.
“One-third of Canadians who recently exited the workforce say they moved up their retirement date, according to a poll of people aged 55 to 75 for RBC Insurance,” she reports.
Thirty-four per cent of those responding to the RBC survey said they “left their jobs earlier than planned” due to the pandemic, the article notes. “Another 30 per cent of those who haven’t yet made the leap to retirement says they’re planning a change in date, either sooner or later, thanks to the pandemic,” her report adds.
But, the article notes, there’s a problem – retirement is getting pricey.
“One in four said they’ve ended up spending more than expected, and 41 per cent said they’ve been hit with surprise expenses, including expensive house repairs and rising costs of health care and transportation, or having to provide unexpected financial support for family,” Wells writes.
Meanwhile, she adds, “inflation hit 6.7 per cent in March from the same time last year, the highest gain since January 1991, bringing sticker shock for consumers at the gas pump and grocery store.”
Since then, inflation has continued to climb, reports Wells, and the Bank of Canada hasn’t ruled out further rate hikes to try and combat inflation.
With those newly retired reporting higher costs, will soon-to-be-retired workers try and hold on to their gigs?
“The events of the last two years are clearly affecting Canadians — including those nearing retirement,” states Selene Soo, director of Wealth Insurance and RBC Insurance, in the article. “And with the current high inflation rate added to the mix, many are feeling concerned about their purchasing power and increasing expenses.”
Inflation is a worry for 78 per cent of those surveyed by RBC Canada, the article notes. Statistics from a C.D. Howe Institute study, authored by noted retirement expert Bob Baldwin, show that house prices have doubled in the last 20 years. As well, the study (cited in the Post article) notes, retirement assets (registered retirement savings plans, tax-free savings accounts, and workplace pensions) have jumped to $158,000 on average, more than twice what they were in 1999, there’s still concern out there.
A shocking 25 per cent of those aged 45 to 64 have no retirement assets at all, the article notes. Those without workplace pension arrangements tend to have little to no TFSA or RRSP savings, states Baldwin in the Post article.
“These realities suggest that a minority of the future elderly may have trouble maintaining their standard of living in retirement,” he states in the article.
Wells has done an excellent job of pointing out a very serious issue – the growing lack of workplace pensions.
If you are fortunate enough to have a workplace pension arrangement of any kind, be sure to sign up for it and contribute as much as you can. This is especially true if you haven’t planned (or started) to save much on your own for life after work.
If you’re not sure how to go about saving for retirement, the Saskatchewan Pension Plan may be the option you are looking for. You can contribute up to $7,000 annually to SPP, and can transfer in $10,000 more a year from other retirement savings vehicles. SPP will look after the hard work – investing your money in volatile markets – and when the time comes to give back your security badge and parking pass, SPP will turn those savings into income. 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.