Canadians worried about retirement

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Nearly 30 per cent close to retirement think income won't be adequate: StatsCan
2 hours ago
TORONTO — Nearly 30 per cent of Canadians nearing retirement are less than confident the money they're socking away for when they leave the workforce will suffice to maintain their standard of living, according to data from Statistics Canada.
The survey released Tuesday found that 19 per cent of respondents aged 45 to 59 are expecting their retirement income will be "barely adequate." Another nine per cent expect it to be "inadequate" or "very inadequate."
Statistics Canada senior analyst Grant Schellenberg said respondents weren't explicitly asked about the reasons behind their answers, but he said researchers can gain insight by looking at other characteristics.
Those who have pension coverage and more years of service are more positive about their retirement financial future, he said. The same applies to those with RRSP contributions and who own a home, he added.
"So not surprisingly, those with greater financial resources had far more positive assessments of their financial future in retirement than those with fewer financial resources," Schellenberg said Tuesday from Ottawa.
The percentages of those expecting less than stellar retirement income comes as no surprise to at least one financial expert who believes the numbers are actually much higher, and said many people planning to call it quits before or at age 65 will likely be in for a rude awakening when faced with financial reality.
Kurt Rosentreter, a certified financial planner and chartered accountant in Toronto, said for the vast majority of people who don't have guaranteed pensions, he finds "very few" have any clue about the status of their retirement savings.
Another component is that whether it's cars, vacations or eating out, the average Canadian isn't too crazy about giving up their lifestyle because they're getting older, he said.
"The old kind of textbook rule of thumb that you can retire on 70 per cent of your income - I'm absolutely not seeing that," said Rosentreter. "I'm seeing many people spending more in their 60s than they did in their 50s in a way that you actually need to have even more money."
"I think because people don't want to be forced to live off of half or a third of their pre-retirement cash flow that their only answer is to work longer."
While most Canadians nearing retirement receive financial advice, including advice about retirement planning and programs, nearly three in 10 do not.
And while most people approaching retirement said they understood Canada's public retirement programs, like the Canada Pension Plan, one-quarter said they didn't understand the programs at all.
Schellenberg said those within five years of their planned age of retirement were far more likely to say they understood the programs than those 10 to 15 years away from leaving the workforce.
"One of the indications here is that for individuals who are further away from retirement, that information may not seem as pertinent in their lives and they may not be seeking it out."
Nearly half of survey respondents said they expected to leave the workforce before 65.
But Schellenberg said what struck him about the results concerning projected age of retirement is they weren't entirely in line with trends seen in the workforce.
"While age 65 still seems to be a strong benchmark in people's minds in terms of their planning for retirement, we do see ongoing labour market participation among older workers in Canada, particularly among those in their later 60s," Schellenberg said.
"Whether those plans to retire at age 65 will come to fruition is yet to be seen."
Rosentreter said for individuals under 45, he often finds it's easy for them to defer thoughts of retirement plans because of other costly commitments like mortgages or putting children through school.
He believes the impact will be felt in the next 10 years when boomers retire, as they've been a generation that has generally lived well on income.
"I worry about a lot of them because I think that they're headed for a bit of a cliff, meaning that they got a lot of money while they're working, but when they ultimately do retire... they could be in for a rude awakening as to what will be left to live off of," he said.
"It may force them back into the workplace in ways that aren't exactly attractive, but they may have no choice."
Survey findings are based on two reports focusing on retirement plans of individuals aged 45 to 59. Data was drawn from the results of the 2007 General Social Survey, which included more than 9,200 respondents who hadn't previously retired and had worked during the 12 months preceding the survey.
A 1991 survey on aging and independence and the 2002 General Social Survey were also used to draw comparisons.
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