We’ll work until we drop: study
More Canadians are unprepared for retirement
A new study says you might never retire.
That’s right, 17 per cent of Canadians expect they’ll be in their job to the bitter end, while a growing number of the rest of us believe retirement is getting further and further away.
The survey f rom HSBC Bank Canada provides a glimpse into how Canadians perceive their future and it appears to be filled with work. The numbers add up to the average working person expecting to retire at 63, up from the 61 of their parents.
“We believe Canadians just didn’t anticipate the financial obligations when they truly retired — some of the key findings support this,” said Jocelyn Hsiung, head of HSBC branch networks in British Columbia.
“Perhaps if they have not planned for retirement, and they started quite late, they find it quite surprising towards the age they really want to stop working that financially they might not be ready.”
The survey found 54 per cent of today’s retirees say their preparations were adequate, but 40 per cent say they did not prepare well enough and of that group that doesn’t have enough money, 40 per cent came to the realization only after they retired.
Perhaps then, it’s not surprising that 17 per cent of the people not fully retired say they will never be able to quit working. Part of the problem seems to be while 72 per cent of retirees experienced a fall in income, only 48 per cent had a similar drop in spending.
“At the time of retirement, they find they have different obligations such as medical, nursing care and longer life expectancy,” Hsiung said. “The other thing they don’t consider is other family members. When Canadians retire, we find they have other financial obligations.”
HSBC found 14 per cent of people were funding a dependent in retirement while 32 per cent of people not fully retired made the same claim.
Those expenses are no doubt playing a part in the increasing debt levels of seniors. An Equifax Canada Inc. report issued last month showed average debt for consumers 65 years and over climbed 6.5 per cent in the second quarter over the previous year, the biggest year- over-year increase in the period for any age group.
Doug Jones, senior vicepresident and trustee in bankruptcy with BDO Canada Ltd., said low interest rates have proved tempting to seniors, who have opted to work longer instead of considering budgeting discipline that would allow them to retire without any debt.
“I’ve had people say to me they are never going to retire. I’ve had seniors tell me they just can’t retire. I did a consumer proposal for a person today who is 65 years of age and he’s planning on working for at least the next five years,” Jones said.
So you work a little longer? Marcel Boyer — who wrote a paper recently for the C.D. Howe Institute that said if you consider the differences in how we age, a 65-year-old today is like a 60-year-old in the 1950s — says everybody needs to start thinking about second careers.
“There are two groups, some don’t retire because they don’t have financial means and the other group just wants to keep working,” Boyer said. “The solution is maybe you retire at 70 to 75.”
He thinks there needs to be a general rethinking about work to accommodate people who might just be tired of doing the same thing they’ve done for 35 or 40 years.
“They might need something to complete them for the 15-20 years after they reach 55, but right now the system is not geared toward educating that type of person,” he said.
Doug Porter, the chief economist with Bank of Montreal, says the evidence is already showing up in the labour data that people are working longer.
“Every month when the labour force numbers come out we have a new record level of people 55 and over (working). The participation rate for that group has been screaming higher in recent years,” the economist said.
Porter cautions that while retirement has been lauded as a goal, it remains a relatively new phenomenon. “You go back in history and retirement was a new concept. People used to retire for a year or so when life expectancy was in the 60s,” he said.
The chief actuary for Mor neau Shepell, Fred Vettese, says many of the people worried they won’t have enough money probably have too-high expectations of their future needs.
Working years might stretch out a bit, but Vettese says there is no excuse to “never” retire. “All the surveys show after retirement people are not as concerned about their financial means as they were before retirement,” he said.