More workers expect to outlast savings by 10 years
Almost one in five (18 per cent of) Canadians aged 50 and up are planning to push out their retirement date, according to a report from RBC.
The reason? Twenty-one per cent of those with more than $100,000 in investable assets now expect to outlast their savings by 10 years, up from 16 per cent in 2010.
In fact, Canadians are still far from achieving their retirement savings goals. Workers with more than $100,000 in investable assets are looking at having over $1 million in retirement, but only have roughly $700,000 saved. Those with less than $100,000 in investable assets are hoping for over $530,000 in retirement savings, but only have roughly $60,000 saved.
Worse, 50 per cent do not yet have a retirement financial plan, and just 20 per cent have created a formal plan with an advisor or a financial planner.
“If you’re nearing retirement without a formal plan, there’s a shrinking window of opportunity to review your options, to see if you can enjoy the retirement lifestyle you’re hoping for,” says Rick Lowes, vice-president for strategy at RBC. “Retirees will find a way to make their finances work, but this may mean they aren’t leading the lives they were hoping for when they retire.”
Forty per cent of Canadian adults worry about the effect of COVID-19 on their savings and retirement plans, according to a separate report.
Many Canadians are looking to do the following should they need more money in retirement:
|
Actions |
>$100K investable assets |
<$100K |
|---|---|---|
|
Return to paid work |
31 per cent |
36 per cent |
|
Stay in current home and live frugally |
37 per cent |
36 per cent |
|
Move out of house to downsize or rent |
31 per cent |
23 per cent |
|
Use cash in some investments |
55 per cent |
16 per cent |
|
Borrow against home equity |
13 per cent |
six per cent |
|
Ask a family member for help |
three per cent |
five per cent |
While 61 per cent of Canadians consider health and long-term care a key retirement priority, 66 per cent admit to having limited or no understanding of the health and long-term care options and costs they should be saving for to live well in retirement, according to a separate report from Edward Jones.
Employers may have a role to play in helping older employees understand financial planning for retirement, according to the Pew Research Centre.
“Making it easier for workers to leave their funds in the workplace plan – rather than requiring the removal of funds upon departure from the firm – could provide attractive options to more retirees. In addition, employers could offer opportunities for emergency savings, whether in a retirement plan or alongside one, as well as counseling on the importance of emergency savings as part of a workplace financial wellness program,” it says.
