Boomers are redefining retirement, erasing the line in the sand between steady employment and a definitive retirement age.
The reality is that Canadians are living and working longer. The key for many advisors will be recognizing how this affects a client’s retirement vision and financial plans.
Gone are the grand parties, celebrating an employee’s 30, 40 or 50-year career with one company. Boomers are doing things their way, often turning the stereotype of carefree days spent with grandchildren, golfing buddies, or bridge club players on its head. Today, some are gradually transitioning into retirement, reducing hours over time or ending one job to begin another.
The 2014 Sun Life Canadian Unretirement™ Index revealed 65 per cent of respondents said they’d work past age 65 because they need to and 35 per cent because they want to. Statistics Canada has also concluded that more than half of workers aged 55 and older return to the workforce within a decade.1
For some Canadians, it’s about extending their income at a time when they’re at the peak of their earnings. Others simply enjoy working, whether it be full time, part time or consulting a few days a week. How does this affect retirement planning? That’s a question advisors need to clarify with clients.
Another worry clients may have is outliving their income. The good news is longevity offers an extended lease on life, but that often comes with challenges. Retirees will be looking for guidance on how to fund those extended years in retirement.
With greater longevity also comes the worry of inevitable health risks. Continued employment or a gradual retirement can be seen as a way of ensuring there’s a measurable income stream in the event of an unforeseen health issue. Next to the 60 to 64-year-old age group, centenarians (those over 100) are the fastest grouping group.2
Even if some boomers keep working and don’t necessarily need the extra income, it’s still a good idea to discuss realistic retirement planning goals to ensure sufficient savings are in place when they’re needed. Your sound financial advice could mean the difference between staying afloat in retirement and charting a course for the destination of choice.
If mature adults choose to remain employed longer, they may be concerned about insufficient savings accumulation, volatile market conditions, inadequate income from RRSPs and CPP or perhaps the phased-in increase of Old Age Security (OAS) eligibility from 65 to 67.
Canadians want assurances that some of their retirement income will be guaranteed for the rest of their life. Find out what’s driving their retirement vision. Whether boomers want to or need to work, it will make a difference in how you adapt your financial planning advice and ultimately help clients achieve lifetime financial security.
The Money for Life™ video series can help. The videos steer conversations toward the importance of building and protecting savings, caring for families and covering future health needs. They’re short, animated presentations that clearly explain the bigger picture around retirement income concepts, including the importance of insurance.
Boomers are redefining retirement and the need for financial advice from a trusted advisor has never been stronger—they need help navigating this new terrain! By showing that you understand and can anticipate clients’ needs, you can help them create a holistic financial plan so they can retire with confidence knowing their needs will be covered.
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1 Aneta Bonikowska and Grant Schellenberg. Employment Transitions Among Older Workers Leaving Long-term Jobs: Evidence from Administrative Data. Statistics Canada. Ottawa: Social Analysis Division. (January 2014)
2 Statistics Canada. Centenarians in Canada, 2011 Census. (May 2012)