Industry must work together to reduce the numbers who are unprepared for retirement

Deloitte Canada has surveyed more than 4,000 retiree and near-retiree households, revealing a stark picture: 55 per cent of near-retiree households will have to make lifestyle compromises to avoid outliving their financial savings. That number jumps to 73 per cent of near-retiree households that will be at risk of financial hardship if they require long-term care or face other unexpected costs.

“Given roughly 40 per cent of retirement wealth inequality is due to a lack of financial knowledge, the financial services ecosystem must collaborate with the health care system and the public sector to equip Canadians with accessible retirement advice, holistic near-retirement offerings, updated pension planning, quality health care and new resources to retire confidently,” says Hwan Kim, partner, financial services innovation and open banking with Deloitte Canada.

The report, entitled Running out of time: An urgent call to fortify Canada’s private retirement pillars, found only 14 per cent can retire with confidence; 31 per cent will require public pension support, 58 per cent do not have formal retirement plans in place and 44 per cent of those still working were dipping into their retirement savings to pay for non-retirement related expenses.

“To address these challenges, the Canadian financial services ecosystem must collaborate across banking, wealth management, insurance and the public sector,” they add. “Together the financial services ecosystem must focus on the three main categories of commercially viable solutions: improve the quality and accessibility of near-retirement advice and products, help retirees manage rising retirement costs, and help Canadians build healthy savings habits early on.” 

The report sorts the array of solutions into those three categories. Again, they are to improve the quality and accessibility of near-retirement advice, devise expense management strategies for use in retirement and to help Canadians build health savings habits early on.

“If these solutions are implemented the combined efforts of the financial services ecosystem can help 38 per cent of near-retirees achieve better financial security in retirement,” they state. “The combined solutions could also generate billions in incremental revenue for the financial services industry and would effectively set a global standard for how Canada can lead the way in innovation, new business building and transformation to confront the retirement challenge.”