Freedom 68: Canadians feel retirement dreams fading

Originally published in the Globe and Mail on March 8th, 2011. To go to the Globe and Mail website please click here

The recession and a shaky global economy are forcing more Canadians to scuttle retirement plans and keep working.

Forget Freedom 55 – the new reality is Freedom 68. That’s the average age at which Canadians now expect to retire – a sea change from just a year ago, when most Canadians figured they’d retire at age 65, a study released Tuesday shows.

Delaying retirement will send multiple ripples through the economy. More Canadians staying on the job or landing part-time work means younger people – whose jobless rate is now 14.4 per cent – will see fewer openings and more competition. It will force some employers to re-jig succession plans and adjust recruitment levels. There are positive offshoots, too – it could also, in the coming years, alleviate pressures as labour shortages become more acute.

“The recession did a lot of things. In addition to wiping out a lot of retirement savings … it jarred people’s sense of security. If they see everybody around them losing their jobs, they feel more anxious and realize they’ll have to work longer to have enough to retire on,” said Susan Eng, vice-president at CARP. Tellingly, her group is re-branding itself from the Canadian Association of Retired Persons to reflect the times: Carp – Canada’s national advocacy organization for older Canadians.

Nick Bacon retired at age 67 in December. After realizing how little he had to live on, he returned to a 40-hour work week this month.

“You sit in your house during those winter months, and every time you venture outside, it costs you money, which you have to conserve. So you spend most of your time reading books and watching television,” says the resident of Markham, Ont. “People just can’t get by with this amount.”

The former general manager of an Ontario road-sign company said pensions for him and his wife amounted to $32,000 a year. Rather than scrape by, he’s invested in a vending-machine business he hopes will augment his income.

He’s not alone. “We used to see that the biggest factor was people wanted to work. They wanted to stay active and stay mentally fit,” said Kevin Strain, senior vice-president of individual insurance and investments at Sun Life Financial Inc., which published Tuesday’s study. “The big shift we’ve seen this year, people are saying not just [that] they want to work, but more and more people are saying they have to work.”

The average Canadian now expects to retire at 68, a full three years later than a year ago, the third annual Sun Life survey found.

And it appears that the closer people get to retirement, the further away it seems to be. People in their thirties and forties expect to retire at 67. People between 60 and 65 think they’ll retire at about 72.

The study found those at the higher end of the income scale plan to keep working because they want to stay mentally active, or love what they do. Lower-income workers say they need to keep working to take care of basic needs.