Restless Nights: Survey shows expenses, income affects Canadians' retirement planning
A pair of new surveys suggest the majority of Canadians may not be able to retire according to plan.
According to the 2014 Sun Life Canadian Health Index, conducted by Ipsos Reid, 69 per cent of retired Canadians did not stop working when they had planned. Among those, 41 per cent retired earlier than expected due to personal health.
"Health is one aspect but in other surveys we've done people are (also) concerned about outliving their money, concerned about health events, and we know Canadians are living longer," said Brigitte Parent, senior vice president of individual insurance and wealth at Sun Life.
The survey also found that 53 per cent of Canadians are worried about the cost of drugs or medical treatments, 47 per cent worry about paying for long-term care and 45 per cent are worried about outliving their retirement savings.
This is the fifth year of the health index commissioned by Sun Life, and it is based on the findings of an Ipsos Reid poll conducted between June 19 and July 2, 2014. The survey sampled 2,799 Canadians from 18 to 80 years of age.
The impacts of retiring earlier than expected coupled with the costs of an illness or disease can compound the issue, said Parent. It also means many Canadians will be unable to work longer if they're financially unprepared for retirement when the time comes.
"The majority, two thirds, of those who said they would work longer than age 65 were working longer because they have to, " said Parent.
The survey also found the No. 1 concern keeping Canadians awake at night is money. In fact, the top three sources of anxiety in Canada are related to finances.
More than two-thirds of Canadians admit to being stressed, and the top three factors cited in the report are:
• 41 per cent worry about personal or household finances;
• 31 per cent worry about trying to maintain a budget; and,
• 30 per cent worry about unexpected expenses.
"I think it speaks to the reality of what's going on in a lot of peoples' lives, " said Parent.
Another study, released by the Conference Board of Canada in October, reinforces the notion that Canadians do not feel prepared for retirement.
The study, A Survey of Non-retirees and Retirees in Canada: Retirement Perspectives and Plans, found 60 per cent of respondents felt they have not saved enough to retire comfortably. Almost 60 per cent of those on the cusp of retirement (55-64 years of age), and about 40 per cent of those over the age of 65, reported they have not put enough money aside.
More than one in five respondents decided to retire later than their initial plan five years ago.
At least part of the problem can be attributed to our poor understanding of finances.
"About half of the survey respondents rated themselves as average, and one-in-five note that their skills are below average or poor, " said Judith MacBride-King, lead research director.
Recently, the provincial government has announced it would address concerns over retirement savings by introducing a Made-in-Ontario pension plan to help augment the Canadian Pension Plan, which is capped at about $12,000 per year.
Since only about a third of all Ontario workers are covered by a workplace pension, Premier Kathleen Wynne made the new pension plan part of her promise to voters in the last election, which the Liberals won with a majority.
If approved by the Ontario legislature, the new mandatory Ontario Retirement Pension Plan will take effect in 2017 and will require workers who don't have a pension to set aside 1.9 per cent of their pay. That translates into about $790 for someone earning $45,000.
"Our position is evolving as we learn more about what the premier is thinking, it's still early days at this point, " Parent said of the new provincial pension plan.
Wynne has been critical of the federal government's reluctance to review CPP, but Prime Minister Stephen Harper has made it clear he will not implement changes to the plan.
During a visit to Kitchener in April, Harper told a crowd that the federal government has made saving through RRSPs and tax-free savings accounts easier, and if Canadians aren't willing to take advantage of these methods to save for the future, "they're not interested in the government coming in and imposing another tax on them."
When it comes to money and their retirement, Canadians have several concerns:
• 53 per cent worry about the cost of drugs and medical treatments in retirement
• 47 per cent worry about being in long-term care longer than they are financially prepared for
• 45 per cent worry about out-living their retirement savings Source:?2014 Sun Life Canadian Health Index
-With files from the Toronto Star. This article appeared in the Waterloo Chronicle