With recent changes to Canada’s old age security pension, Canadians and retirement have been in the spotlight. According to Scotiabank’s annual investment poll, over 30 percent of Canadians plan to retire later, up from 27 percent in 2011. It’s not news that Canadians are retiring later than they did a decade ago, but why?
- We’re still reeling from the recession. Baby boomers are still bouncing back financially from the recession a few years back, and more Canadians are finding that money that was meant for retirement was needed elsewhere. Of the two thirds of those polled who said they plan on retiring, only 50 percent plan on contributing to their RRSP in 2013.
- We’re starting to save later. According the annual RBC RRSP poll, Canadians don’t start saving for their RRSP until age 32. Experts say the later you start saving, the more risk there is that you won’t be able to make up for lost time at retirement.
- We’re living longer. Life expectancy in Canada is changing. A 50 year old worker with a post-secondary education could work up to another 15 years before retiring, compared to 12 in 1998. The life expectancy of that 50 year old is 21 years after retirement. For less educated workers, the life expectancy is around 18 years.
- We make last minute contributions. 60 percent of Canadians who will contribute to their RRSPs in 2013 will do so in the last two weeks leading up to the deadline to contribute. That lump sum means missing out on year round compound interest.
- We have more employment opportunities. A 2011 report from Statistics Canada revealed that 34 percent of Canadians 55+ were employed in the workforce. Compare this to 22 percent in 1996. Many Canadians retire, and then choose to join the workforce again because of the opportunities. More and more businesses have popped up in the last decade that target seniors who have retired but are still looking to work, or volunteer. One program in Canada offers seniors the opportunity to help other seniors.
- We aren’t making retirement savings a priority. Many Canadians have focused their investment priorities towards their own parents or their kids, and neglected their RRSP accounts. 28 percent of RBC poll respondents said they were strongly concerned that caring for their parents would affect their retirement savings. 48 percent said saving for their children’s education would impair their retirement investment.
More opportunities for seniors later in life could mean a better Canadian workforce, even if it means longer payrolls. Canadians should start planning their asset management and investments in their 50s, to control risk and look to more conservative investments in the next decade. Human resource managers should keep up to date with retirement trends and be aware that their workforce won’t be retiring as soon as they might have thought.
About The Author
Meghan Tooley is a commerce student and active online blogger from Winnipeg, Manitoba. She often offers her views on social media surrounding human resource development, as it relates to industry trends. She writes on behalf of Metric Marketing, an SEO firm also based in Winnipeg. For more information about careers and career development services, visit People First HR Services.