Working past retirement age likely to be more common

If you’re someone who gazes out the window of your place of employment, dreaming of spending your autumn years never far from the cottage, a new survey from Sun Life Financial might just prove to be a rude awakening. In a study released on Wednesday, the number of Canadians who expect to retire by age 66 has declined by nearly 50 per cent since 2008. With changing lifestyles and an uncertain economy, more and more of Canada’s seniors have been eschewing the ceremonial gold watch and retirement cake.

“People are working now for a couple of reasons,” said William McBay, financial planner at Kitchener’s Sun Life Financial. “They haven’t planned enough and they’ve lost a ton of money; and they’re realizing that working for 40 years and just stopping probably isn’t very healthy either.”

McBay, who has

worked as a financial planner for 15 years, has seen considerable change in clients’ retirement strategies during his tenure.

“When I first started, I rarely had clients suggest that they would have an income during retirement. And I would say that at least 50 per cent of people I deal with now talk about it – from consulting, or selling some crafts on the weekend, or doing some fence-building for a few years, just something to keep them busy so they don’t go from work, work, work to Oprah.”

The statistics in Sun Life’s study are dramatic and revelatory. While 37 per cent of respondents desire to work past 66, a full 63 per cent said they expected to whether they liked it or not. Some 38 per cent of those who plan to retire in the next 20 years believe they may outlive their savings, while 31 per cent believe they will not have enough money for all medical expenses.

And, consider this: only 23 per cent of Canadians say that saving for retirement was their top priority, with that number falling to 12 per cent among Gen X-ers. Compare that to the nearly half of Canadians whose top priority is paying off debts and credit card charges.

The Sun Life report attributes many of its changing statistics to the financial collapse of 2008, which continues to send shockwaves even in this period of recovery. Still, McBay said that during the crisis and its aftermath, Waterloo Region has been relatively lucky.

“Even in the last couple of years, we have had just the tail end of what other regions saw in 2008 and all of 2009,” said McBay. “With some of our companies – with the RIM layoffs, and some of our employers saying, ‘Whoa, we gotta look at things’ – that took a couple of years to sink into us. By that point, a lot of people had said, ‘I think I’m going to make some changes,’ and even then we weren’t affected as much.”

But whether inside Waterloo Region or out, the collapse undoubtedly changed the way retirement savings are accumulated. Today, McBay finds himself frequently dealing with misconceptions from before the crash, and guiding customers to other ways of investing.

“I had a client come in and say, ‘Well Bill, I’m 55, I guess I gotta start taking on more risk,’” said McBay. “I said, ‘Change websites and newsfeeds, because I don’t know what you’re reading.’

“The old way of investing – buy equities and hold them for a long period of time and they will outperform income-based investments – that’s gone the way of the do-do bird … The new theory, and it was really carved in 2008, is buy an income-producing asset that pays you regularly to hold, whether the value goes up or down. You’re being paid to wait, and sometimes you wait a little bit or long, but you’re getting paid.”

McBay added that one challenge facing retirees is maintaining a standard of living. At the start of his career, he saw that more were satisfied with cutting out the fat from their lives.

“Now it’s, ‘Well, I need a data plan on my Blackberry, and I need high-speed Internet because we travel’ … I would say it’s the keep-up-with-the-Joneses theory. ‘Well, we should get a new house, because we can, or we want to.’ Or, ‘They travelled, so we should travel.’”

However, some others aren’t maintaining a lifestyle so much as setting up a new one. “When you get to 65-years-old, you’ve accumulated the largest amount of holidays you would ever have in your career, so why not use them to do things other than garden? The costs of those lifestyle choices are getting higher and higher.”

So save early and save often, because as the old song goes, “It’s later than you think.”