Canada’s workforce greys as boomers hit the road to retirement

The Canadian workforce is “older than it has ever been,” reports the CBC, citing information from the latest national census.

“More than one in five working adults is now nearing retirement, says Statistics Canada — a demographic shift that will create significant challenges for the Canadian workforce in the coming decade,” reports the network.

There are more people aged 55 to 64 in the workforce than those aged 15 to 24 entering it, the article notes.

And that’s a big change.

“In 1966, there were 200 people aged 15 to 24 for every 100 Canadians aged 55 to 64, but that has now been flipped on its head. In 2021, there were only 81 people aged 15 to 24 for every 100 Canadians in the 55 to 64 age group,” the CBC report continues.

Boomers, the report explains, began retiring around 2011. The fact that so many of us are boomers – retiring ones at that – is “the single most important driver of Canada’s aging population trend,” the CBC notes.

It’s expected that the number of folks aged 85 and over will triple by 2051, with one quarter of the population being over 65 by that date.

Meanwhile, at the other end of the scale, Canada’s fertility rate hit an “an all-time low of 1.4 children per woman,” the CBC report adds, citing Statistics Canada data. There are six million young people under 15 in the country compared to seven million of us who are 65 and older.

This greying trend raises a number of concerns.

First, the article says, the traditional “transfer of knowledge” from older workers to younger ones won’t be easy to achieve if there is a shortfall of young folks entering the workforce.

Next – a question not posed in the article – we have to wonder if this grey wave of retirees will have sufficient retirement savings. The Canada Pension Plan, for example, uses CPP contributions from working Canadians to help pay the pensions of retirees, so a change in the ratio of working to retired Canadians could have consequences on that program. (The CPP Investment Board has set aside a massive contingency fund to deal with this exact problem, so that’s reassuring.)

Third, a point raised in the CBC video that links to the article, is the cost to society of looking after all those older folks, particularly as they hit their 80s and beyond. We may see a need for more long-term care spaces or a more determined effort to boost homecare – and both things will carry a future cost.

Younger folks may find that better jobs become more widely available, which is a silver lining to the issue.

Retirement can last many decades and carries a hefty price tag. If you have access to a workplace pension plan or retirement program, be sure you are signed up and contributing the most that you can. If you don’t have a workplace program, the saving responsibility is on your shoulders. Joining the Saskatchewan Pension Plan is a great option. Let the experts at SPP navigate the tricky waters of investment; they’ll grow your nest egg and when the day comes that work is an afterthought, SPP can turn your savings into steady retirement income. Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Why some retirees are happier than others

Writing in the National Post, noted financial author Christine Ibbotson offers up some ideas on why some retirees are happier than others.

She begins by asking – from the point of view of someone still working – how one might think all retirees are happy. “They don’t work or commute any more. They have no deadlines, commitments, angry bosses, or backstabbing coworkers to deal with, and they can sleep in every day,” she writes.

(On that last point, Save with SPP will add a qualifier – unless they have dogs!)

Ibbotson writes that research has found that some retirees are happier than others. And money – or at least, management of it – seems to factor into the happiness equation, she adds.

“When we looked at the financial aspects of the happiest retirees, it was not that they had more money, but more that they viewed their money as a tool for their happiness. The happier retirees had no mortgage or consumer debt. They also stayed in the homes that they purchased and paid off while they were working,” writes Ibbotson.

On the idea of staying in their original home, Ibbotson adds “many retirees who moved during the early years of retirement to ‘right size’ their life, took on home renovations, or made big purchase decisions and wound up with more debt than they bargained for; forcing them to eat into their retirement savings or carry a new mortgage that wasn’t anticipated.”

Other findings – happier retirees had “two or three” vacations a year, while the less happy had one or less, Ibbotson writes. The happy had made use of financial planners and had “three to five” sources of income funding their retirements. The happiest had multiple hobbies – “four to seven,” versus the less happy, who had “fewer than three.”

Another noteworthy discovery was that the happiest retirees were not necessarily the ones “with the most toys,” as us boomers were led to believe in the 1980s.

“Turns out the happiest retirees in the survey were not lavish spenders and seemed to be right in the middle-class with their spending especially on cars, clothing, and vacations. The unhappy retirees on the other hand were the opposite. This group had a lot more status symbol purchases and high-priced vehicles, with BMW being the most popular,” she observes.

Ibbotson sums the research up very nicely.

“Only you can make yourself happy, healthy, fit, slim, busy, wealthy, content, independent, prosperous … you get the idea,” she writes.

“So, no matter where you are, no matter what is going on right now in your life, change it and mix it up this year. Find your own happiness equation and just do it.”

Multiple income streams in retirement is a big plus, and the Saskatchewan Pension Plan can help with that. If you have a pension plan or retirement arrangement at work, that’s a big plus for you – but if not, the SPP has everything you need to create that extra income stream. They’ll take your contributions, invest them prudently and grow them, and will provide you with that extra income that helps bankroll your hobbies or vacations once work is an afterthought.

Check them out today!

Join the Wealthcare Revolution – follow SPP on Facebook!

COVID did a number on the retirement rate, but it’s climbing again

One unexpected side effect of the pandemic was a dampening of people’s plans to retire.

According to new research from RBC, covered in a story from CTV News, there was an unexpected drop of 20 per cent in the retirement rate last year – likely due to COVID-19.

RBC’s Andrew Agopsowicz tells CTV that the dip “was likely a result of uncertainty about retirement savings as the pandemic arrived.”

“It’s what held people back,” he affirms in the story.

But – perhaps an indicator of better times ahead – retirements are starting to return to normal levels, he notes.

“The return to normal could be a good period for people to make a decision they were probably going to be making (anyway),” Agopsowicz states in the story.

There has been a general rise in retirements over the last decade as the boomer generation hits age 65, the story notes, and “that trend will continue for several years.”

A fringe benefit of the boomers getting out of the workforce may be “a near-term labour shortgage for some types of jobs,” Agopsowicz tells CTV. This will be due to a trifecta – boomer retirements, a low national birthrate, and lower levels of immigration, the story states.

In mid-July, CTV reports, Statistics Canada reported that the Canadian economy added 230,700 new jobs, “as restrictions put in place to slow the pandemic were rolled back across the country.”

Savings may have to last a long time

If you are among those planning to log out for the last time in 2021, Money Control outlines some of the steps you may want to consider to ensure your retirement stash isn’t exhausted before (ahem) you are.

Most retirees will live beyond age 85, the article notes. “We could live for up to 30 years or more post our retirement… (and) women live longer than men,” the article states.

With that in mind, you should plan for your investments to outperform inflation, the article says. If you can’t get there with fixed-income investments, “investing in equity will give you long-term growth; in between, there will be volatility.”

So, putting these two bits of information together – the stampede towards the workplace exit for boomers will soon resume its normal pace. The nest eggs boomers have built, and that younger folks are still building, will need to last for maybe 30 years. And while conventional wisdom suggests that the older you are, the less exposure to risky equities you should have, inflation hasn’t been a factor for a while but could one day reappear.

One answer is a “balanced fund” approach, where experts position their fund with exposure to both fixed income and equity, making strategic moves in advance of emerging trends. A great example is the Saskatchewan Pension Plan Balanced Fund, which has produced an average rate of return of eight per cent since its inception 35 years ago. While past returns aren’t a guarantee of future performance, the idea of having someone else decide when to get in or get out is a sound one – you can instead focus on your golf game or line dancing steps. Check out SPP today.

Join the Wealthcare Revolution – follow SPP on Facebook!

How will the pandemic affect your retirement?

As we prepare to start a new year, it appears that there is a faint light visible at the end of the tunnel that is the pandemic. Vaccines have been developed that appear promising and hopefully they’ll start to be in distribution by the time you are reading this.

That said, the pandemic has had a serious impact on all of us, and especially on our plans for retirement. An interesting article in Espresso covers the topic in detail. Here are some of their key findings.

Those relying on their own savings, rather than a pension plan from work, for retirement may have to postpone their retirement “by up to five years,” the article reports. This is because of the shellacking our economy – and our savings – took due to the COVID-19 outbreak.

But in an unusual twist, the article continues, “some people in their 50s and 60s are being forced to retire early.” Many of these folks are people who lost their jobs due to the pandemic, the article notes.

Many of us with adult children are having to help them out more than usual due to the crisis, Espresso reports. “If you want to help your kids out,” states financial planner Lawrence Sprung, speaking to U.S. network CNBC, “make sure you don’t give them an amount that is greater than, or outside the scope of your normal excesses.” The implication is that if you raid your retirement cookie jar to help the kids, it will mean you’ll retire later or with less.

And, Espresso reveals, the opposite situation – kids helping parents – has also become more common. Research from the American Association for Retired People “found that roughly a third of adults in their 40s to 60s had offered financial support to their parents in the last year.”

While Espresso warns that some of us will retire with less, others will retire with more savings than planned. “A significant number of Americans – including more than half between the ages of 55 and 64 – are spending less money during the pandemic,” the article tells us.

One thing that’s become popular as we all sit around at home more is renovating the old home office. Be careful, advises Espresso. South of the border, the average kitchen renovation costs $56,000, but tends to add only $38,000 (on average) to resale prices.

The article advises older people to consider part-time work, launch a business, or to delay government retirement benefits for as long as possible. “It’s worth it to wait until (you can) receive full benefits,” Espresso suggests.

Finally, the article says, if your savings have taken a hit in the short term, “focus on the long-term plan.” Markets can rebound so don’t let short-term bumps in the road cause you to “act irrationally,” Espresso says.

Members of the Saskatchewan Pension Plan have flexibility when it comes to retirement savings. If you’re out of work and can’t contribute, you can take a pause. If you’re one of the lucky ones who is finding they have more money to save these days, consider adding a few extra dollars to your SPP account. The experts running SPP’s finances always focus on long-term investing, and that’s allowed SPP – which celebrates its 35^th year of operations in 2021 – to have an average rate of return since inception of over 8 per cent. That’s quite an achievement when you consider that the last 35 years includes Black Friday in 1987, the “tech wreck” of 2001-2, the Global Financial Crisis of 2008-9 and our current pandemic! Be sure to check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!