Almost half of Canadians think the best way the government can support aging people planning for their retirement is to give them tax breaks and to allow them to look after themselves.
HSBC Insurance, the company behind the Future of Retirement report released Wednesday, declares that an “era of greater personal responsibility” has arrived.
“They realize there’s nobody around offering a hand,” says Susan Eng, vice-president of advocacy for CARP, a group representing older Canadians. “Some people are going to throw themselves in front of a streetcar, but most people in our generation are saying, ‘OK, we’re going to have to do something about that’.”
The survey included 15,000 respondents aged 30 to 70 from 15 countries, including Canada, the U.S., Britain, France and China.
Forty-eight per cent of Canadians said the best way for the government to support financing an aging population is to encourage more private savings through tax relief on savings. That was significantly higher than the 31 per cent of international respondents who endorsed the idea.
Financial experts say possibly the only silver lining to the recession is that it’s spooked people into paying attention to their non-existent retirement plans, building up savings and watching credit.
Robert Abboud, a certified financial planner in Ottawa, recently has noticed his clients being much more interested in knowing their rates of return and in coming in for regular reviews. He’s even seeing the children of clients coming in to draw up a financial plan as soon as they land their first full-time job, he says — which is exactly what financial planners recommend, but most people don’t bother to do.
“If there is that mind-shift where people will start taking responsibility for retirement, it could be the best thing that ever would have come of the recession,” he says.
Taylor Train, chief operating officer of Advocis, the Financial Advisors Association of Canada, says he’s been warning about boomers’ lack of retirement planning for a decade. He believes the downturn will turn around as quickly as it came on, but says people have realized the Canada Pension Plan isn’t enough to rely on and they have to develop some financial literacy.
“It’s really interesting how long it takes for the public to realize it’s on the cusp of the abyss,” he says.
Eng at CARP says the downturn has had a profoundly destabilizing effect, pushing even people in their 30s and 40s to contemplate their retirement finances.
Months of grim news reports have acquainted ordinary people with the intricate details of “so-called gold-plated pension plans” and the fact that “too big to fail” companies, such as the automakers are more than capable of doing so, she says.
“People start saying, ‘Hold on a minute, I don’t even have a pension plan’,” she says. “And the people who do have a few dollars saved have watched it disappear.”
Doug Mitchell, 61, took charge of his own retirement savings in 1991 when he left an oil company to start his own consulting business, withdrew his pension funds in a lump sum and put it in a Locked-In Retirement Account (LIRA). He’s deeply frustrated that his money is now subject to restrictions to which a typical pension isn’t, because he retired before turning 65, but he and his wife managed to make their “dream of Freedom 55” a reality a few years ago.