Four reasons they call it unretirement

A recent release of the Sun Life Canadian Unretirement Index drew attention to the fact that few of us expect to retire the way our parents did, which is to say all at once, at or before 65. In fact, just three in 10 plan to be fully retired at 66. And almost half (48%) are planning a phased retirement. There’s much more to the story though, and not all of it is good news.

Those who plan to work past 65 believe they’ll do so for several years on average. A big chunk of the country expects to retire with less than six figures in savings. And Canadians – with good reason – are worried about both debt and medical costs in retirement.

Here are four extraordinary findings from this year’s Unretirement Index. They don’t call it unretirement for nothing.

• Among those who plan to retire later than 65, the average expected retirement age is 70.8. The average expected retirement age among all survey respondents was just over 68, which is consistent with last year’s result. (It jumped from 64 the year prior to that.) But the average among those who think they’ll work past 65 is astonishingly high. Imagine a workplace where 20-year-olds labour side-by-side with 70-year-olds.

• Half the country expects to retire with less than $250,000 in savings. The actual number is 54%. A full one-third of Canadians plan to retire with $99,000 or less. Granted, these are self-reported expectations and they don’t include the value of a home or other property. But it’s not a lot of money to stretch over 20 years or so of retirement. (Statistics Canada reports that the average life expectancy for women at age 65 is 21.5 years. For men, it’s 18.3 years.)

• Almost half of Canadians are worried about debt in retirement. The figure is 47%, and it’s evenly split across age groups. Those that earn $100,000 or more annually are less likely to have this concern. Still, 33% of Canadians in this category say they’re worried about debt in retirement. Survey participants were asked a number of questions about debt. A couple of highlights: just 32% say they won’t take on additional debt during retirement and 20% say they won’t retire until they’re debt-free. On the flip side, 14% would buy a car on credit after retiring, 9% would borrow to help their kids, another 9% would do so to renovate their home, 6% would take on debt to buy a home and 4% would do so to invest.

• Three in 10 Canadians are not at all confident that they will be able to cover their medical expenses in retirement. Fifty-six per cent are somewhat confident that they will, and 16% are very confident.

There is a bit of good news. Two in five Canadians reduced their spending in 2011, and a third managed to reduce their debt. That first result is down from last year (51% cut their spending in 2010). But it is clear that a sizeable number of us understand today’s economy and are doing something concrete to adapt. Twelve per cent managed to get a better job or get additional hours. And 16% say they decided to delay retirement during the year.

That all suggests a healthy dose of pragmatism.

To find a CARP recommended Sun Life Financial advisor visit www.sunlife.ca/CARP.

Content provided by BrighterLife.ca

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