Retirement jitters on the rise

By Vikram Barhat | May 5, 2011 | Last updated on May 5, 2011
2 min read

Although economic fundamentals in Canada are improving, retirement remains an area of concern for many Canadians.

The latest Russell Financial Health Index, an online calculator that gauges the overall financial health of Canadian investors, revealed that Canadians feel unsettled about retirement, particularly women who are less positive about their financial health in retirement than men. Older Canadians, though, are less concerned.

“We are encouraged that much of the global economy continues to transition from recovery to expansion, and we are seeing increasingly stronger fundamentals,” said Keith Pangretitsch, director of national sales at Russell Investments Canada. “Nonetheless, recent Black Swan events, such as Japan’s earthquake and nuclear crisis, as well as, the ongoing crisis in the Middle East, seem to be giving some Canadians pause.”

Older or already-retired Canadians were the least concerned, exhibiting a more positive attitude about their financial health. “While this seems counterintuitive, it may be related to their more experienced and ‘settled’ state in these unsettled times,” said Pangretitsch.

The index noted that recent global events have brought about a shift towards greater concern about retirement this year compared to the last year when Canadians were beginning to feel the economy was turning the corner.

What is particularly noteworthy in the first quarter of this year, is the shift in sentiment about what is worrying Canadians as they think about retirement, added Pangretitsch.

In the first quarter of 2011, Canadians were more concerned about reducing debt or borrowing, family needing financial help, reducing fixed costs for greater flexibility and the financial impact of a partner/spouse’s death.

In the fourth quarter of 2010, however, it was all about leading an active and healthy lifestyle in retirement and having a reliable source of income for their desired retirement lifestyle.

Notably, the need for a reliable, trustworthy professional advice reached an all time high level of importance.

“While having reliable, trustworthy professional advice has always been a fairly important and constant component that Canadians consider as part of their financial health in retirement, this quarter investors are telling us it has taken on added importance,” said Pangretitsch. “During these uncertain times, it is hard to predict when and where shocks to the market will come from, but when they do occur, having broad diversification within your investment portfolio is the best defence against these macro-shocks.”

Vikram Barhat