Lack of savings driving many boomers to consider delaying retirement
Twenty-one per cent of young baby boomers (ages 55 to 64) in Canada have not saved anything for retirement, according to Franklin Templeton's 2019 Retirement Income Strategies and Expectations (RISE) survey released May 8.
Franklin Templeton says this lack of savings likely explains why nearly half of Canadian young boomers (46 per cent) would consider postponing retirement, with approximately 15 per cent of Canadians saying they expect to work until the end of their lives. Meanwhile, 22 per cent of self-employed Canadians say they don't ever plan to retire.
Retiring earlier than expected
While delaying retirement may be their intention, often this does not work out, the survey suggested. More than half of Canadian young boomers (54 per cent) retired earlier than expected, compared to about one-third of Canadians (32 per cent) ages 65 to 73.
The survey also found that Canadian young boomers retired due to circumstances beyond their control more often than older Canadian boomers (34 per cent versus 20 per cent, respectively).
"In 2009, when equity markets started to recover, many young boomers were moving up the career ladder; whereas older boomers were approaching retirement at the top of their earning years," said Duane Green, president and CEO, Franklin Templeton Canada. "A decade later, after a long bull market run, young and older boomers are in different life situations once again. We see many older boomers benefitting from the transfer of wealth from their parents, yet the young boomers have had a challenging experience balancing more expensive lives – due to caring for elderly parents and still having financially dependent children – all while saving for that increasingly elusive retirement."
Working with an advisor
The survey found that nearly half (47 per cent) of young boomers currently work with a financial advisor. Those who do are 37 percentage points more likely to be saving for retirement compared to those who have never worked with an advisor (96 per cent versus 59 per cent).
"Regardless of what generation someone is in, getting advice and creating a savings and retirement strategy is an important step towards ensuring they meet their future goals," said Liz Bouthillier, SVP, Sales, Franklin Templeton Canada. "As many people continue to live longer due to advancements in health care, the chances of outliving their retirement savings increases. In addition to helping people save for retirement, financial advisors are a vital resource in assisting retirees with generating and understanding the various sources of retirement income."
When asked if their retirement strategy will generate enough income to last 30 years or more, more than three-quarters of retired young boomers (77 per cent), who work with a financial advisor, said it will—compared to 45 per cent of those who have never worked with an advisor. Of those retired young boomers who have never worked with an advisor, 37 per cent stated that they don't have a retirement strategy whatsoever.