Working Canadians will be facing a new retirement reality when compared to their parents and grandparents, says Mackenzie Investments’ second annual retirement study, Mackenzie Retirement Reality Check 2020 released Oct. 27.
The study, conducted by Pollara Strategic Insights, also revealed that working Canadians are looking for more insight and assistance from the financial services industry on how to effectively make the transition to retirement.
Among the significant differences in the retirement dynamics of working Canadians compared to those who are already retired is that working Canadians expect to retire, on average, at the age of 62 compared to the average retirement age of 57 for those already retired.
They also believe they’ll need more than twice as much in retirement savings (an average of $878,000) compared to current retirees (who reported having, on average, $427,000 in savings when they retired).
Forty-five per cent of those who are not yet retired are planning to continue working in some capacity. This compares to 9 per cent of those who are currently retired.
Non-retirees also reported having higher expectations for their ideal retirement lifestyle, with 76 per cent planning to travel extensively (versus 44 per cent of retirees).
Mackenzie Investments added that the relative decline of defined benefit pension plans, longer life expectancy, low yields, increasingly complex financial markets, and higher costs of living are other factors contributing to the shifting dynamics of retirement.
"The study's results show that, given their expectations, plans and the unique challenges they face, working Canadians need to address retirement planning and transitioning differently than their parents and grandparents," said Carol Bezaire, Vice-President, Tax, Estate & Strategic Philanthropy, Mackenzie Investments. "They face a new retirement reality that requires a new approach."
The study also found that working Canadians have relatively low awareness and comfort with how they'll be taxed in retirement, as well as estate planning, potential income sources, managing investments post-retirement and retirement budgeting. But, 72 per cent are interested in getting the help of a financial professional to help them prepare for retirement and ensure they have the insights needed, the study revealed.
"Given the challenges and time constraints working Canadians face on a daily basis, it's not a surprise that most have not been able to focus on their future retirement," stated Bezaire. "However, it's encouraging that they want to be more prepared. This presents a huge opportunity for Canada's financial advisors to further demonstrate the value of advice and work with clients to help them become more confident and empowered. As an industry we need to shift the focus from just saving for retirement, to saving and making the transition to retirement."