First wave of retiring boomers finding retirement disappointing

Retirement has always seemed like the light at the end of the tunnel for hard-working Canucks. But new research suggests that retiring boomers are finding it a little disappointing.

Writing in the Ottawa Citizen, noted financial journalist Jonathan Chevreau reports that new research from Sun Life finds “almost three in four retirees – 72 per cent – say retirement is not what they were expecting, and not in a good way.”

The 2019 Sun Life Barometer, he notes, found 23 per cent of retirees reported life after work was a tight money environment, where they were “following a strict budget and refraining from spending money on non-essential items.”

And those not yet retired are delaying their plans, Chevreau notes. A whopping 44 per cent of Canadians “expect they’ll still be employed full time at age 66,” and it’s because they “need to work for the money, rather than because they enjoy it.”

Why the strict budgeting? Chevreau notes that about half – 47 per cent – of those still working believe “there’s a serious risk they could outlive their retirement savings.”

The article says the lack of defined benefit pensions – the type where the retiree receives a pension equal to a percentage of what they were making at work – is one of the reasons for these concerns. Everyone without such plans is either saving in RRSPs or in defined contribution plans. In both these types of savings plans, you save as much as you can, and then turn that lump sum into retirement income, normally on your own.

This tendency for retirement plans to be savings plans designed to build a lump sum is, the article says “devolving responsibility onto the shoulders of individuals,” making the RRSP unit holder or DC plan member the person handling the risk of outliving the savings, known as longevity risk in the industry.

The article offers a couple of ways people can improve their retirement security.

Be sure, the article warns, that you are fully taking part in any retirement program your work offers. “Canadians are leaving up to $4 billion on the table,” the article notes, by not taking full advantage of plans where the employer matches some or all of any extra money they put in.

There’s also a worryingly large group of people who don’t have a workplace pension and aren’t saving on their own via RRSPs or TFSAs, the article reports. That group, the article says, will probably have to work well beyond age 65, but at least they will get more income from CPP and OAS if they take them at a later age.

The article concludes by noting that running day-to-day finances is “hard enough” for Canadians, which may explain the savings shortfall.

If you have a pension plan or retirement savings benefit through your work, consider yourself lucky, and be sure you are getting the most you can out of it. Can you consolidate pension benefits from other workplaces into the plan you’re in now, rather than retiring with several small chunks of savings? Are you eligible for a match, and if so, are you signed up for it?

If you are saving on your own, the Saskatchewan Pension Plan may be of help. You can save on your own through SPP, much like an RRSP, except SPP has the added advantage of offering a variety of annuity products when you retire – these turn your savings into a lifetime income stream that never runs out. As well, you can often transfer pension funds from past periods of employment into your SPP account – contact SPP to find out how.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22