This is sponsored content submitted by Sun Life Financial.
This is part three of a four-part series based on Dean Connor’s Money in Motion article.
The Canadian population is aging.
What’s the fastest-growing age group? Seniors, who are proving they’re here for the long haul. In 2011, an estimated five million Canadians were age 65 or older, a number expected to double in the next 25 years. By 2051, about one in four Canadians is expected to be 65 or over.1
And which gender is topping their birthday cakes with the most candles?
And by more than just a few.
Recent longevity data from the Canadian Institute of Actuaries (CIA) say 20 per cent of 65-year-old women and 17 per cent of 65-year-old men will live beyond age 95.2 What’s more, gains in life expectancy are resulting in an increasing number of Canadians reaching “centenarian” status. In 2014, 7,607 Canadians were aged 100 years and older, compared with 4,043 a decade earlier.3 And for every 100 male centenarians, there were 700 female centenarians!4
This may not come as a surprise when you think about your own social circle. My mother’s circle of friends all survived their husbands and many are still going strong in their 90s. Who are the oldest people you know? If you’re like me, they’re significantly older than I recall from years gone by. And there’s a good chance many are women.
According to Statistics Canada, in 2001 there were just 3,795 centenarians in Canada.5 Between 2006 and 2011, that number grew a whopping 25.7 per cent. And by 2061, centenarians are projected to number approximately 82,000. Of those, 59,300 are projected to be women.6
Centenarians are the second-fastest-growing age group in Canada, just behind the 60- to 64-year-old age group.7 And who’s leading the pack for the group being dubbed the “supercentenarians,” or those aged 110 or older (you live that long and you’ve earned “super” status in my books!)? Women. In fact, of the three confirmed living supercentenarians in Canada, all of them are women!8
These realities are inspiring extensive research on aging – and specifically, as it relates to women – which necessitates a significant shift in thinking around retirement planning and product focus for this important demographic.
We’ve come a long way, baby!
In Paul H. Irving’s book, The Upside of Aging: how long life is changing the world of health, innovation, policy and purpose, Dr. Joseph Coughlin, founder and director of the MIT AgeLab, authored a chapter that takes a fresh look at developing new markets, and improving existing ones, to appeal to a rapidly growing segment of our population: the older consumer.
“The new face of old age is increasingly wealthier, healthier, and more educated. It is also more female,” Dr. Coughlin writes. “Businesses who understand how to best serve this new demographic will have the most success marketing their technologies and services to the older consumer.”
While Dr. Coughlin is based out of the U.S., his research is fitting for the Canadian demographic. Women are outliving men here too. And another reality is that many are spending their oldest years alone.
Anna Rappaport, past president of the Society of Actuaries in the U.S., wrote a paper entitled Post-Retirement Risk Research: Findings and Messages for Advisors. In it, Rappaport talks about the importance of planning for the life of the longer-lived spouse, who is often female. She suggests many people believe the surviving partner will be at least as well-off financially as they were before the death of their spouse. But this isn’t always the case and particularly for women.
While women’s participation in the labour market has sharply increased in recent decades, many women now in their 60s may have worked part time in service roles or had time away from the workforce, which have affected their savings. As a result, the economic status of many widows actually declines after the death of their spouse. The report notes that roughly 40 per cent of older women living alone have virtually no income other than government programs.
In Canada we know that 40 per cent of seniors’ (65+) income is from government sources,8 which leaves 60 per cent that needs to be covered by other sources of retirement income. When you add in factors such as increased longevity and a migration from defined benefits pension plans to defined contributions, the onus is shifting to the shoulders of the individual, many of whom are women.
Women are worried about it too, which is where you as their trusted advisor, can help. According to the 2014 Sun Life Canadian Health Index, 41 per cent of Canadian men surveyed say they’re worried about outliving their retirement savings versus 50 percent of women.9 Conversely, some haven’t considered, in a practical way, what would happen if they did survive their partners. On a personal note, when my own father died suddenly at the young age of 65, I had to show my mother how to write a cheque as she hadn’t been involved at all in the finances up until that point. It broke my heart to think she didn’t know if she would be fine as she entered the next phase in her life. I needed to really get involved and help her manage her finances until she passed away in her 80s.
Retirement planning focused on women
What does this mean from a retirement planning perspective? And how can you help more Canadians – and specifically women – ensure their money will last so they can achieve lifetime financial security?
It starts with a conversation. And sharing insight to empower them to take action and prepare for a longer retirement with the right mix of life, health and wealth solutions for both individuals and spouses or partners. If you are working with a couple, it’s important that both are present when you meet and you talk about what happens when one person dies and the other is left behind. We also know that Canadians, and in particular women, are living longer, and so adjusting their retirement planning horizons to reflect this new reality is essential. We’ve written extensively about longevity in a recent Bright Paper, Running on Empty: Are we facing a longevity crisis in Canada?, which provides insights you can share with your clients. And if you really want to bring it home for clients, simply ask them, “Who is the oldest person you know?” and “Do you know, or are you related to anyone in their 90s, 100, or beyond?”
There are also a number of ways to help protect surviving partners, including joint and survivor options for annuities, life insurance, retaining asset balances that can be transferred to the survivor, critical illness insurance and long-term care insurance.
Together, as an industry, we need to ensure Canadians are working with an advisor, who is equipped with the latest insights and tailored approach to help them make smart decisions about their money.
In my view, longevity should be rewarded. And what better way to enjoy this amazing resilience than by achieving financial security that lasts as long as their extended lifetimes.
2 Canadian Institute of Actuaries, 2013
3 Statistics Canada, 2014
5 Statistics Canada, Centenarians in Canada, 2011 Census, May 2012
6 Statistics Canada, Table 052-0005 – Projected population, by projection scenario, age and sex, as of July 1, Canada, provinces and territories, annual (persons), CANSIM (database)
8 The Gerontology Research Group, 2014 http://www.grg.org/Adams/E.HTM
9 2014 Sun Life Canadian Health Index, question 80 – the exact number is 49.5 per cent for women and 40.5 per cent for men
Brigitte joined Sun Life Financial in 1995 and has since held various senior-level positions throughout the Company. Prior to her current role, she was Senior Vice-President, Client Solutions. Brigitte was accountable for overseeing the Client Solutions business, providing new and existing clients with wealth and protection solutions, utilizing direct capabilities in product management, as well as distribution and marketing.
Brigitte also has extensive leadership experience within the Group Benefits business. From 2004 to 2008 she led the Group Benefits business for Sun Life Canada and from 2009 to 2011 she was Senior Vice-President, Group Benefits, International where she was accountable for driving additional growth in our group benefits and retirement business across international boundaries. Brigitte also lead the Clarica and Sun Life Group Benefits integration from 2001 to 2003.
Brigitte holds a Bachelor of Arts in Business Administration from École des Hautes Études Commerciales.