More will need to work past 66 in order to retire
TORONTO—Economic uncertainty and poor financial planning are being cited as key reasons why a majority of Canadians surveyed in a new poll say plans to retire by age 66 are more of a fantasy than a reality.
Sun Life Financial’s annual Unretirement Index poll, released yesterday, found only 27 percent of respondents believe they’ll retire by 66—a nearly 50 percent decline from the previous year.
Another 32 percent of respondents said they anticipate doing part-time work past 66 while 15 percent said they remain undecided.
“I think the financial crisis has had a lot of impact on people’s household balance sheets,” said Kevin Dougherty, president of Sun Life Financial Canada.
“The low-interest environment, for sure, has had an impact on people’s savings and projections, but really the realization is that people are living longer and longer,” he added.
“So you put all those things together and a lot of people are increasingly saying they’re going to have to stay in the workforce that much longer.”
The survey found that 63 percent of those polled said they need to work past 66 out of necessity, compared with 37 percent who said it will be because they want to.
Based on a separate survey of 15,000 consumers in 15 markets around the world, global bank HSBC concluded that, on average, people expect to run out of retirement savings just over half-way into their retirement.
HSBC said average retirement is expected to last 18 years globally, and 19 years in Canada, while average retirement savings are expected to last for just 10 years globally and 11 years in Canada.
The global survey was done last July and August for HSBC by Cicero Consulting and released yesterday—one of a number of reports issued by financial services companies during RRSP and tax-planning season.
Canadians have until March 1 this year to reduce their 2012 income taxes by making contributions to their registered retirement savings plan.
The deadline for most individuals to pay outstanding income tax balances is April 30.
The Sun Life survey found that on average, Canadian respondents said they wanted $46,000 in annual income to retire comfortably but 59 percent said they’ll have less than $250,000 for retirement by 66.
Thirty-eight percent said they’ll have less than $100,000 saved.
Dougherty said the results show that Canadians aren’t doing the math properly and meeting the gap between their expectations and their financial reality.
He urged people to put in place a financial plan—regardless of age.
“What we see in the data is that people who have got a financial plan are that much more likely to be able to retire than people that don’t,” said Dougherty.
“It’s never too late . . . but for sure, the sooner you start, the better off you will be,” he stressed.
Thirty-eight percent of those surveyed say they are worried they will outlive their retirement savings while 31 percent say they don’t know whether they’ll have enough money to cover medical costs in their golden years.