Do you know anyone who retired earlier than they expected — not by choice but by circumstance?

According to a Statistics Canada study, one quarter of workers who retire do so involuntarily because of job loss or poor health or to care for a loved one. And in 2009, involuntary retirements reduced expected working life (the number of working years a 50-year-old worker has left before retirement) by almost two years.1

Today, circumstance can easily trump age. The latest results from the Sun Life Canadian Unretirement Index show that 28 per cent of Canadians expect to be fully retired at age 66, while 27 per cent think they’ll be working full-time and 29 per cent think they’ll be working part-time. Sixty-five per cent said the main reason they will be working at age 66 is because they need to.2

Retiring earlier than expected can have financial implications for those who are counting on a late retirement. They’ve saved for fewer years than expected and face possible financial consequences when it comes to government sources of income and workplace pensions, depending at what age they start. They also have more years of spending in retirement ahead of them.

These years of spending could stretch for a long time given current life expectancy estimates. According to Statistics Canada, life expectancy at birth for women is just over 83 and almost 79 for men. And life expectancy after reaching age 65 increases to almost 87 for women and 84 for men.3 Living longer means Canadians will be spending many more years in retirement than previous generations did. In many ways, that’s good news as it means more time to enjoy a well-earned retirement. However, not everyone is well-prepared for a retirement that could last 20, 30 or even 40 years.

A 2012 LIMRA study indicates that nearly four in 10 pre-retirees didn’t assume they’d live to a particular age when planning for retirement.4 If clients have underestimated life expectancy or haven’t planned with it in mind, this could negatively impact their retirement lifestyle and increase the risk of running out of money in retirement, especially if they retire earlier than they expected. Women are particularly vulnerable as they generally retire earlier and live longer: according to Statistics Canada, the average retirement age for women was 62.3 in 2013, as opposed to 63.7 for men.5

Nobody wants to outlive their money. But the risk is there if clients haven’t planned for the number of years they could spend in retirement, especially if it begins earlier than expected. Talk to your clients about their retirement goals. A later retirement is not always possible. What if they need to retire earlier than planned? Do their retirement plans also take current life expectancy into account? Are they prepared for a long retirement?

Since Canadians are living longer, consider adjusting age projections when you do retirement planning with your clients. You can also read about the new Longevity Risk Illustrator tool and how you can use it to show your clients a personalized visual of how long they’ll live, help them understand how much more time they’ll spend in retirement, and suggest retirement income solutions.

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1 Carrière, Yves and Diane Galarneau. 2012. “How many years to retirement?” Insights on Canadian Society. December. Statistics Canada catalogue no. 75-006-X.

2 2014 Sun Life Canadian Unretirement Index.

3 Statistics Canada. Table 102-0512 – Life expectancy, at birth and at age 65, by sex, Canada, provinces and territories, annual (years), CANSIM (database). (Date modified: 2012-05-30).

4 2012 LIMRA Ready, Set, Retire study.

5 Statistics Canada. Table 282-0051 – Labour force survey estimates (LFS), retirement age by class of worker and sex, annual (years), CANSIM (database). (Date modified: 2014-01-09).