Pandemic is causing 8 million Canucks to rethink retirement
There’s no question that 2020 has been a year like no other. Its effects on the economy and our finances have been profound.
A new study by Edward Jones and research company Age Wave, reported on by Global News, shows what impacts the pandemic has had on retirement savings in particular.
The report says a whopping eight million Canadians “are rethinking their retirement timing” due to the pandemic. While one of every 10 Canucks still plans to retire early, “one third believe they will retire later,” citing financial concerns, the Global article notes.
“If many working adults were not adequately prepared for retirement, COVID-19 has thrown them even farther off course,” the article notes.
The study found that two million Canadians “have stopped making regular savings to their retirement savings.” Before the pandemic, the research shows, 54 per cent of adults were confident about retirement. Now, that confidence indicator is down to 39 per cent, Global reports.
“Those who think they’ll have to postpone retirement cited needing more income, shrunken savings, investment losses and increased uncertainty about how much they’ll need in retirement,” the article says. “The few who are considering anticipating retirement amid the pandemic, on the other hand, said they `realized that they were looking forward to retirement, or they want to spend time doing other things that are more important to them than work,’” the article states.
The article quotes financial author Alexandra Macqueen as noting that those with workplace pension plans, notably defined benefit plans, aren’t as impacted by the pandemic and can still choose to retire early.
(Save with SPP interviewed Alexandra Macqueen recently, here’s a link to the interview)
“What I’m … thinking more and more is that the difference between people with pensions and without is getting so much more stark,” she says in the Global article.
The article notes that older Canadians (boomers and the cohort that is older than them, the “Silent Generation”) are generally doing fairly well during the pandemic, while younger generations (millennials, Gen Z, and Gen X) are struggling.
The older are helping the younger financially, the article concludes, while the younger generations are making sure their elders are staying health, a “silver lining” of intergenerational cooperation amidst the pandemic.
The article underlies the disparity between those who have a workplace pension and those who don’t. When you’re in a plan at work, pension contributions are deducted from your pay – the savings is automatic, a “set it and forget it” way to pay yourself first.
The pandemic will eventually end, but if you lack a workplace pension plan, you still can set up an automatic retirement saving system of your own.
The Saskatchewan Pension Plan lets you automate your retirement savings through pre-authorized transfers from your bank account. You can start small – an affordable contribution – and ramp it up when you’re making more in the future. If there’s a trick to retirement saving, it’s to start doing it and then keep on with it. Starting and stopping won’t get you there. Pay your future self first. The money you set aside today may be missed in the short term, but in the long run you’ll have more security for the future, post-work years.
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.