Canadians complacent about retirement, waiting too long to save and not following through with financial and social plans for new life
TORONTO, November 9, 2006 – A survey released today by Desjardins Financial Security indicates the message that people need to stash away some savings for retirement is catching on with Canadians. The bad news is the message is not resonating with people until they reach their 30s or even into their 40s and beyond – making retirement a potential challenging time for people, both financially and socially.
In the fifth annual survey on retirement, Desjardins Financial Security measured the cost of complacency for Canadians when it comes to retirement saving and planning. The results are startling: although age 60 is the average, ideal age of retirement for surveyed workers, more than one third (35%) of workers and partial-retirees indicated they didn’t seriously start saving for retirement until they were over 40 years old.
For half of the workers and partial retirees over 40 years old, the ideal age for retirement is between 56 and 65, where as 34% of the same group would like to retire by age 40 to 55. When questioned further about whether it will be possible to retire at this age, given what they know now about their financial requirements, the majority (60%) of workers 40 years old and over feel they are realistic in setting their ideal age for retirement. These figures may allude to a country that is forward looking and sophisticated in their approach to retirement saving and planning, however the survey, conducted by SOM, revealed that on average when it comes to planning and saving, people simply start too late.
“Canadians need to realize that retirement is not a 20 or 30-year vacation,” says Monique Tremblay, senior vice president of Savings and Segregated Funds for Desjardins Financial Security. “People need to change their behaviour and start planning for retirement as soon as possible -earlier than the average age of 35 years old. Through this survey, we discovered that there are groups who are in greater proportion to begin saving after 50 years old. And, these Canadians still, on average, want to retire alongside their peers at age 60.”
The survey revealed two groups of workers began saving before they reached 30 years old. Generally they are couples with children (37%) and those with savings and investments over $100,000 (36%). But in greater proportion were those groups who left saving it until they reached age 50. They are pre-retirees (33%), those with an income between $20,000 and $30,000 (28%), those with savings and investments between $10,000 and $25,000 (25%), part-time workers (20%) and those who live alone without children (18%).
“It is understandable that the extent of the planning and saving must be in relation to the needs and financial capacity, but a simple plan is better than no plan at all,” added Tremblay. “Retirement planning is not just about RRSP contributions. People also need to consider the social aspects of retirement and how that impacts their finances as well.”
Social Aspect of Retirement Needs Planning Too
Financial matters are not the only ones that need to be considered when planning for retirement. Three-quarters (74%) of workers aged 40 years and older indicated they were psychologically prepared for retirement, yet social factors such as loneliness, boredom and no longer being around colleagues weighed heavily on the minds of those surveyed.
A solid majority (82%) feel that it is important to make plans for one’s free time and social life, yet only about half (55%) have actually done so. Seven out of ten (69%) workers feel that it is important to consult with a financial advisor before retiring – only 53% have actually done so. Interestingly, approximately half (49%) feel that it is important to seek advice for the emotional impact that accompanies retirement; few (23%), however, have sought out such advice. Given the fact that most respondents don’t want to work after retirement, it is not surprising that only 22% consider it important to seek advice on this matter and that less than one in ten (9%) have done so.
“Saving for retirement is important but Canadians need to recognize that they must plan their activities to keep themselves occupied and healthy during this long-awaited life phase,” says Dr. Paul Garfinkel from the Centre for Addiction and Mental Health in Toronto. “Work reflects hours put in, but it’s something much more for most people. It helps provide part of your sense of identity, who you are, who your community is and how you connect. Those networks are disrupted at retirement.”
About the Survey
SOM conducted the telephone survey on behalf of Desjardins Financial Security between August 3 and 16, 2006. In total, 1,666 interviews were conducted with a representative sample of Canadian adults. The sampling plan provides proportional estimates with a maximum margin of error plus or minus 2.6% at a 95% confidence level (19 times out of 20). The data was statistically weighted to accurately reflect the composition of Canadians by region, gender and age based on 2001 Census information.
About Desjardins Financial Security
Desjardins Financial Security is a component of Desjardins Group, the largest integrated cooperative financial group in Canada. Specialized in life and health insurance and retirement savings for individuals and groups, Desjardins Financial Security ensures the financial security of over 5 million Canadians from coast to coast every day. It employs 3,659 people and manages more than $17 billion in assets. The company has offices in a number of cities nation-wide including Vancouver, Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Levis and Halifax. www.desjardins.com
IIn operation since 1986, SOM specializes in market research and public opinion polls with the Canadian population. The company conducts research activities in Canada, the United States and France. They can be reached at www.som.ca