If forced to retire early, it would take just five years for 40% of middle-aged people to run out of money, finds a survey by Investors Group.
Two of every five people aged 45-64 wouldn’t be able to cover their cost of living beyond five years if they had to retire unexpectedly and 16% say they would last less than a year. About two-thirds of pre-mature retirements are related to personal or family health issues.
“When faced with sudden retirement, your previous retirement savings goals and payment plan fall by the wayside and a new strategy must be developed to reflect your current assets and opportunities to generate income,” says Tim Cottee, vice president, Retiree Planning, of Investors Group.
At their current pace of saving and investing, 36% of people surveyed say they wouldn’t be able to live the retirement lifestyle they pictured for themselves if they stopped working early.
CPP or OAS would be the primary or secondary source of retirement income for 83% of people, followed by RRSPs/RRIFs (73%), their company pension plan (56%), investment income (46%), earned income (42%), other investments (36%), and support from others (17%).
Only 22% of people between 45 and 64 years old have critical illness insurance and long-term care insurance. Medical costs and loss of income can impact retirement savings and leave family members in a difficult situation if those suffering haven’t equipped themselves with the proper insurance.