Canadians are living longer, but that doesn’t necessarily mean they need to save more because they’re spending more years in retirement.
A BMO report on the aging economy finds that the number of years spent in retirement isn’t growing as Canadians are instead opting to work longer. They’re either staying in the workforce for additional years or earning self-employment income.
In fact, one in five Canadians who were age 65 and older worked during the year in 2015, according to StatsCan data—that’s the highest recorded proportion since the 1981 census.
The data also indicated that workers with higher levels of education (at least an undergraduate degree) and those without employer-sponsored pensions were most likely to work beyond age 65.
The emergence of the gig economy likely makes working past a traditional retirement age easier and more attractive, and doing so is particularly popular among baby boomers, says the BMO report.
Canada’s average age of retirement was about 64 in 2017, and it’s been slowly increasing for more than a generation, StatsCan data say.
Older clients’ concerns
While a longer life doesn’t necessarily mean a longer retirement, it does mean Canadians have specific financial concerns that must be addressed.
The BMO report, which is based on a survey of Canadians age 55 and older, finds many Canadians are concerned about health problems and costs (51%) as they face greater longevity. This concern is followed by fear of running out of money (47%), and being a burden to family (40%).
BMO also finds evidence of conflict between spouses or partners, with almost 60% of respondents saying they have different opinions about financial goals than their partners. Less than half (41%) said there were no major differences in opinion on financial matters that affected their relationships.
Differences between partners may be due to women tending to outlive men, says the report.
Another concern is helping family. One-third (33%) of respondents said they want to help their children financially now versus later through an inheritance. This was followed by concern for a surviving spouse’s standard of living (28%).
The report notes that an increase in the number of blended families can complicate how financial assistance is provided. For example, whose children should benefit and from which parent’s resources? Divorce costs also come into play.
When asked about investment and retirement issues, the most frequently cited concern is maximizing retirement income (25%), followed by long-term care costs (23%) and outliving savings and investments (22%). Only 13% are worried about diminished capacity.
When asked about philanthropy, about one-quarter of respondents (24%) said they want to be remembered for their charitable acts or donations. Most (72%) want to be remembered by the values and life lessons passed on to family and friends.
For more details, see the BMO report.