TO KEEP WORKING IN RETIREMENT …
The idea of retiring at 65 is withering along with laws and regulations that once forced workers out of their jobs at that supposedly magic age when the pastures of idleness beckoned The new reality is that Canadians are becoming less confident that they will have enough money in RRSPs and other assets to cover living expenses The decline is remarkable In 2008, according to the 2013 Sun Life Unretirement Index, 46% said they were confident of having enough money In 2012, the number declined to 29% Reasons for working longer are both practical and demographic Here are five:
To earn more money
Life expectancy has increased dramatically and potential years in retirement, have accordingly grown Statistics Canada says that while men born in 1950, now in their 60s, could expect to live to 68 and women born in 1960 to 74, those born in 2000 can expect to live to 77 and 82, respectively More years to support spending implies a need for more savings and that implies more years of work or at least part time work in what would otherwise be years of complete retirement
To boost company pensions
Defined benefit and contributory plans in which the employer makes matching contributions to employee savings grow retirement benefits with more time on the job More years of work add to company defined benefit plans which usually take the 2% of the average annual wage or salary of the last five years of work and multiply it by years of work Inflation at just 2% a year can add 10% to the final wage
To enhance Canada and Quebec Pension Plan benefits
CPP and QPP regulations provide for an incentive of 0 7% a month for each month that a claim for benefits is postponed beyond one’s 65th birthday up to the 70th birthday For five years, that’s a 42% boost in monthly or annual benefits CPP and QPP benefits are taxable, so if you expect to make a full retirement in the five year interval from 65 to 70, the prospect of not just enhanced benefits but a potentially lower tax bracket make this a good move
To boost Old Age Security
Benefits can be postponed by as much as five years for a gain of 0 6% a month for each month past the 65th birthday That’s a 36% potential gain in OAS at age 70 over age 65 If you don’t need OAS, let it grow Again, your tax bracket may drop if you stop working in the years from 65 onward, meaning that you will not only get more OAS via the boost, but you will get to keep more of it too
Work makes some people happier
Data published in 2006 by the Washington, D C -based Urban Institute show that being engaged in paid work increases satisfaction with life More than any other factor, such as previous income or net worth, having productive work to do, which may include volunteering as unpaid work, increases reported happiness, the think-tank concluded