StatsCan study finds retirement income rates better than expected

Writing for the Advisor’s Edge blog, James Langton reports that — after research by Statistics Canada — that “retirement has been turning out better than expected for many Canadians.”

StatsCan recently published data from a follow-up study from a group of retirees, who were first surveyed in 2014 with a follow up two years ago, the article notes.

The research found that “retirement has been comfortable financially for more people than expected,” the article reports.

In 2014, 67.5 per cent of respondents said “they expected their retirement income to be adequate, or more than adequate, to comfortably maintain their standard of living,” the article states.

Jump ahead to 2020, and “81.6 per cent found that their retirement income was sufficient to comfortably cover their living expenses,” the article adds.

The StatsCan study found a similar increase in satisfaction levels among both women and men, the article continues. In 2014, 68.5 per cent of men and 66.4 per cent of women “expected to have an adequate retirement income,” the article reports. But by 2020, those numbers jumped to 82.2 per cent of men and 81 per cent of women, the Advisor’s Edge article tells us.

Those with disabilities and with high school education or lower also saw improvements in their retirement income, the article concludes.

In 2014, the article reports, 72.4 per cent of those with a disability and 73.5 per cent of folks with high school educations or less said they had adequate retirement income. Those numbers jumped in 2020 by “17.1 and 23.2 percentage points, respectively,” the article concludes.

According to a post on the CHIP reverse mortgage site, “the average retirement income in Canada currently sits at $65,300 per year, per household (before tax). That works out at $32,650 per person, if the household includes a couple.”

It’s not stated in the Advisor’s Edge piece at what income threshold people become happy with their retirement income, but we can probably assume they are making the average amount or better.

Some of that $32.6K per person will come from government sources, such as the Canada Pension Plan, Old Age Security, or the Guaranteed Income Supplement. Traditionally, the rest of a person’s retirement income comes from two other sources — workplace pensions and personal savings.

Employers — are you offering a retirement program for your team? Did you know that the Saskatchewan Pension Plan can help you deliver a retirement savings program at your workplace? The scaleable SPP works for both large and small businesses, and relieves you of the heavy lifting of collecting and investing contributions and distributing statements and tax slips. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

New NIA study says we may need to work longer before retiring

New research from the National Institute on Ageing (NIA) entitled Improving Canada’s Retirement Income System sheds some new light on the age-old question of when to retire.

Writing about the research for the Advisor, James Langton sums up the study, by noted retirement experts Keith Ambachtsheer and Michael Nicin, this way – “greater pension coverage, higher savings and longer working lives will all be needed to ensure an adequate retirement for Canada’s aging population.”

The paper, reports the Advisor, warns that “retirement is getting more expensive and harder to achieve.”  The research found that the cost of long-term care in Canada will “triple to $71 billion in the next 30 years.”

So the costs of looking after older folks are going through the roof at a time when “pension coverage has steadily declined, and private saving is proving harder to achieve amid rising costs for housing, education and childcare,” the Advisor notes, again quoting the NIA paper.

The authors of the study also note that even those who do save are doing so in less favourable conditions, the Advisor tells us. “Today, we face historically low bond yields and uncertain equity returns in the face of climate change and political turbulence across the world. This means retirement savers may not get as much help from favourable financial markets as they did in the post-World War II decades,” the Advisor states, quoting from the paper.

The paper reaches the conclusion, the Advisor reports, that three important public policy considerations need to be met. Pension coverage must be increased, savings rates need to be boosted, and there needs to be thought given to ways to incent people to work longer.

Commenting on the same report in a Globe and Mail opinion column, the NIA’s Dr. Bonnie-Jeanne MacDonald elaborates further on these ideas.

“Canada can better keep up with the retirement income systems of other countries by improving the labour-force participation of older workers,” she writes.

“Having more older Canadians working will also increase tax revenue. With Canada’s aging population, it will help ease shortages in labour and skills supply as baby boomers contemplate their exodus from the work force over the coming decade.”

Working later also has an impact on saving, she notes. “If you work longer, you’ll need to save less for retirement. Every year you delay your retirement is one fewer year you’ll need to draw on your savings, and one more year for those savings to grow,” she explains in the Globe article.

The takeaway here is this – you may live for a long time. If you don’t have a workplace pension, you will have to save on your own for retirement. If you haven’t saved enough, you will have to work longer than you planned.

A step you can take on your own to address this problem is joining the Saskatchewan Pension Plan. This is a great resource if you don’t have a workplace plan or are not sure how to invest. SPP does the heavy lifting for you, growing your savings at a very low cost (and with a great track record) and then turning those savings into an income stream at the time you leave the workforce. It’s never too late to get cracking on saving, so check them out today.

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