A wide-reaching report by University of Alberta Professor Donna Wilson reveals some compelling facts about retirement – including the idea that working to or even beyond traditional retirement age may make sense for many of us.

Reached by Save with SPP in Edmonton, Prof. Wilson, who teaches in the Faculty of Nursing, says the “whole idea of Freedom 55, and that wonderful retirement with big vacations, is a fantasy.”

“The reality of retirement is quite different,” she explains. Sixty-four is the median age of retirement in 2020. “A year ago, it was 63, the year before it was 62, and the year before that it was 61,” she notes. “This is a massive shift – more and more people are not retiring early, and that fact is not widely recognized.”

Many are working longer because they simply lack the retirement savings or workplace pensions to be able to afford to retire, she explains. Prof. Wilson points to European studies that see a lot of people still on the job there to age 68, 69, or even 70.

“In Europe, they have worker shortages and an aging population – open jobs that can’t be filled,” she notes. Yet, often “highly qualified people” are lured into retirement because of the terms of their workplace pension plans, and are leaving work when they still have a lot to offer.

“Many pensions are based on age and years of service, such as the 85 factor. When you hit that factor, many people say `I’m outta here,’” she explains.

Prof. Wilson says Canada should seriously look at modernizing its retirement systems to align better with the reality of people wanting to work or needing to work later.

Early retirees can find they are barely making ends meet in retirement, and “a lot end up going back to work. Finances are a huge part of it but many are not prepared to be cut off from their jobs and the people they work with,” she says.

The current pandemic crisis may offer some of us “a taste of what it (retirement) could be like,” she says. “You are stuck at home, you are lonely and bored, you’d love a nice trip overseas but you can’t go.”

Prof. Wilson says that with age 64 being the current median retirement age, it means half retire before that age and the rest after it. While it’s true that some folks may have health problems and truly need to retire at a younger age, most others don’t. What can be done to keep their experience and skills in the workforce?

The professor has spent time working in Ireland, which – like Alberta – has had a boom and bust cycle in its economy. When the economy is booming, “immigration is up, there are lots of jobs, housing prices rise – and then there’s a crash, and no jobs.”

Her Irish experience found that there are many “practical, concrete things” managers can do to retain older workers, most rooted in more open communication.

“When an employee is 55 or 60, and it is time for their annual review, the boss should say `we hope you don’t think you should retire,’” so the employee feels valued and needed, the professor points out.

Similarly, “if someone becomes a grandparent, they often retire to spend more time with that grandchild. Why couldn’t the boss say `wow, how nice, do you need to work half time or do you want a few weeks off to help with the new baby?’” By being accommodating about older workers’ needs to take care of grandchildren, but maybe also ill spouses or parents, managers could offer reduced hours and leaves, Prof. Wilson explains.

HR departments, she adds, ought to consider offering health and wellness programs to help retain older workers. “There’s a lot more (employers) can do to be more proactive, and positive about older people to avoid the ingrained ageism that is out there,” she says.

Ageism is a two-faceted problem, Prof. Wilson explains. First, younger people can treat their elders with a sort of disdain, assuming they can’t hear as well, see as well, or work as hard. And, worse, there’s “self-ageism,” where older folks tend to sell themselves short.

Ageism is a myth. Recalling the old Participaction commercials from years ago, Prof. Wilson notes that a 60-year-old today could be in much better physical shape than someone half their age.

We thank Prof. Wilson for taking the time to talk with Save with SPP. Here’s a link to her research.

Flexibility is important with any retirement savings program. If you plan to work later than age 65, the Saskatchewan Pension Plan allows you to delay the start of your retirement to age 71. At that point, you’ll be able to choose from a variety of income options. Be sure to check out SPP today.

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A look at the best of the Internet, from an SPP point of view

High housing costs are throwing a wrench in peoples’ retirement savings plans

In the good and now gone old days, people finished paying for their mortgages, hit age 65, and then collected their workplace pensions. They also got Canada Pension Plan and Old Age Security – bonus!

But those days appear to be gone.

Research from the Toronto Board of Trade, reported on in the Toronto Star, suggests the old way of doing things is no longer working, especially for big-city dwellers.

The story says that 83 per cent of those surveyed by the Board of Trade believe “the high cost of housing in the (Toronto) area was impeding their ability to save for retirement.”

The story quotes Claire Pfeiffer, a Toronto resident, as saying that she bought her home for $430,000 in October 2007, and it is now worth more than $1 million. But the $1,800 monthly mortgage over the last 12 years has taken up over half of her take-home pay in the period, the article says, leaving her with no money to save for retirement. This, the article says, occasionally keeps her up at night.

There are other factors at play, the story says. “Financial experts say the impact of the region’s affordability challenge extends all the way to the relatively well-off and better-pensioned baby boomers, who are hanging on to big houses longer and sometimes risking their own financial well-being to help their kids,” the article says.

As well, the article notes, “high house costs are set against a backdrop of declining defined benefit pensions, a rising gig economy and record household debt.”

The article notes that only about 25 per cent of today’s workers have a workplace defined benefit pension, “the kind that offers an employer-guaranteed payout,” down from 36 per cent from “10 years earlier.” Coupled with the reality that pension benefits at work are less common is the reality of today’s high debt levels. Quoted in the article, Jacqueline Porter of Carte Wealth Management states “more and more Canadians are retiring with a mortgage, which 30 years ago would have been unheard of. People are retiring with debt, with a mortgage, because they just didn’t plan very well.”

She concludes by saying the notion of “Freedom 55… is out the window.”

Michael Nicin of the National Institute on Ageing states in the article that while debt and high housing costs are definitely restrictors for retirement savings, human behavior needs to change. He thinks automatic savings programs are an answer, the article notes.

“Most people in general don’t consider their future selves multiple decades in advance. They’re more concerned about current priorities — getting ahead, staying ahead, buying a home, going through school, daycare, kids’ education,” he states.

The takeaway here is quite simple – you’ve got to factor retirement savings into your budget, and the earlier you start, the better. Any amount saved and invested today will multiply in the future, and will augment the income you get from any workplace or government program. You need to pay yourself first, and a great tool in this important work is membership in the Saskatchewan Pension Plan. You can start small, and SPP will help grow your savings into a future income stream. Be sure to check them out.

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

A look at the best of the Internet, from an SPP point of view

Should 67 become the new 65?

While many of us were brought up expecting Freedom 55, a new report by the Canadian Institute of Actuaries suggests we might all enjoy things better if it was Freedom 67.

The report, featured in Benefits Canada points out that since Canadians are working longer and therefore, retiring later, government benefits should be pushed out farther into the future.

“Canadians are living longer than ever, and many are choosing to work beyond age 65,” John Dark, president of the CIA, states in the article. “It makes sense to update our country’s retirement income programs to reflect this fact.”

Save with SPP interviewed Dark about the research, you can find that story here.

The article notes that men now live nearly 19.9 years after age 65 on average, and women, 22.5. This longer life expectancy, coupled with people working longer, is the reason given for considering system changes, the article states.

The changes the CIA suggests are moving CPP/QPP and OAS “full” benefits from age 65 to 67. The earliest you could get benefits would move from 60 to 62, and the latest from 70 to 75, the article notes.

“In addition to the financial benefit of receiving higher lifetime retirement income, our proposal provides financial protection for retirees against the cost of living longer and the significant erosion of savings from the effects of inflation,” states Jacques Tremblay, a fellow of the CIA, in the article.

Moving the age of benefits has been tried before. There are important considerations to take into account. First, are people working longer because they want to, or because they can’t afford to retire? Moving the goalpost on those benefits may not help people in that boat.

And secondly, we can’t assume that everyone is healthy enough to work past 65 and into their 70s. It will be interesting to see if the CIA’s recommendations are heeded by government.

Retirement’s value outweighs all financial concerns

Many authors have noted that the value of actually being retired outweighs most financial concerns about getting there.

From the Wow4U blog here are some great quotes about retirement.

“We work all our lives so we can retire – so we can do what we want with our time – and the way we define or spend our time defines who we are and what we value.” Bruce Linton

“The joy of retirement comes in those everyday pursuits that embrace the joy of life; to experience daily the freedom to invest one’s life-long knowledge for the betterment of others; and, to allocate time to pursuits that only received, in years of working, a fleeting moment.” Byron Pulsife

“Retirement life is different because there is no set routine. You are able to let the day unfold as it should. Enjoy, be happy and live each day.” Suzanne Steel

Whatever happens, if anything, to government benefits, it’s a wise idea to put money away for your own future retired self. The Saskatchewan Pension Plan offers great flexibility, professional investing, and a variety of options for retirement, whether you plan to start it early or late.

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