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New Russell and Harris/Decima survey reveals that retirement isn’t as scary as it is made out to be
- Majority of retirees reveal that their financial health is strong
- Retirees report needing only 60% of their pre-retirement income
- 68% of pre-retirees expect to work part-time during retirement, yet only 27% of current retirees actually do.
Toronto, Sept. 23, 2008 – With the markets as volatile as they’ve been of late, now is a good time as ever to think about plans for a secure retirement. “It doesn’t have to be a daunting process. Just taking the time to check a few key points should help you put your retirement plan on a steady course,” says Irshaad Ahmad, President and Managing Director of Russell Investments Canada Limited.
“Retirement isn’t as scary or complicated as some make it out to be. In fact, our research shows that Canadians have a lot to be optimistic about when planning their financial futures.”
In an effort to distinguish retirement reality from perception, Russell Investments Canada teamed with Harris/Decima to survey over 2,200 Canadians across the country.
“Our goal was to speak with Canadians about their actual experiences–both before and during retirement. Our findings challenge the conventional wisdom and help to paint a clearer picture of the retirement reality. In short, retirement is not as scary as many people suggest. While it is true that some pre-retirees are anxious about their future well-being, the majority of Canadians at virtually every stage of retirement say they are happy, confident, and financially secure,” says Ahmad.
Reality No. 1: Only 65% of pre-retirees expect their financial health in retirement to be “good”, “very good” or “excellent”. But 88% of actual retirees rate their financial health to be “good”, “very good” or “excellent”.
“In fact, further research revealed that 10 years before retirement, 40% of Canadians felt anxious about their retirement finances. But by their retirement date, this number falls to 27%, and within the first three to five years of retirement, it falls to only 10%,” explains Harris/Decima SVP, Bob Murphy.
“This shows that despite the perception of doom and gloom by pre-retirees when it comes to their financial futures, the reality is that everything is going to be alright – with the right investments, advice, and planning.
Please click on these charts to see how the perception of financial health is at its lowest levels 10 years before retirement, and at its highest levels 15 years or more after retirement. (Source: Russell Investments Canada Limited, Harris/Decima)
Reality No. 2: A survey of actual retirees report needing only 60% of their pre-retirement income – where as it has been suggested that retirees will require 80% of their pre-retirement income to maintain a comfortable lifestyle.
“Certain living expenses tend to drop significantly during retirement as most retirees are mortgage-free and no longer incur employment costs such as daily transportation,” says Ahmad.
“However, for a comfortable retirement, retirees should still plan for lifestyle expenses related to travel, hobbies, and entertainment by seeking investment solutions that still have growth potential. Just because you are retired, doesn’t mean your portfolio has to.”
Reality No. 3: Retirees draw income from many sources, but part-time work is rarely one of them. 68% of pre-retirees expect to work part-time during retirement, yet only 27% of current retirees actually do. Among the minority who do continue to work during retirement, only 23% do so out of financial necessity.
“We believe this research can help Canadians better prepare for retirement in two ways. First, by replacing the potentially paralyzing fear of retirement as a financial threat with a realistic, fact-based sense of optimism,” says Ahmad.
“And second, by showing that taking advantage of professional financial advice and a sensible investment strategy helps Canadians achieve a retirement that is both personally fulfilling and financially healthy. Going forward, investors can expect continued retirement research and leadership from Russell in the future.”
For more survey results and information regarding these research findings, please contact Thien Huynh at (416) 640-2529.
Harris/Decima conducted 2,200 online surveys across Canada between January 25th, 2008 and February 9th, 2008. Survey data was weighted by region and retirement status in order to gain a representative cross-section of Canadians.
The survey respondents had a personal/household income of $50,000 or more and were 42 years of age or older. Of the group, 1,078 were presently employed, and 1,122 were retired from work. The retired group excludes those who were unemployed, students, or homemakers.
Russell Investments provides strategic advice, world-class implementation, state-of-the-art performance benchmarks and a range of institutional-quality investment products. With nearly US$213 billion in assets under management (as of 3/31/08), Russell serves individual, institutional and advisor clients in more than 40 countries. Russell provides access to some of the world’s best money managers. It helps investors put this access to work in corporate defined benefit and defined contribution plans, and in the life savings of individual investors.
Founded in 1936, Russell Investments is a subsidiary of Northwestern Mutual Life Insurance Company and headquartered in Tacoma, Wash. Russell has principal offices in Amsterdam, Auckland, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Singapore, Sydney, Tokyo and Toronto.
Russell Investments Canada Limited is a wholly-owned subsidiary of Frank Russell Company. For more information, please go to www.russell.com/ca.