As retirement nears, expectations dim

Hope for a carefree retirement seems to be fading among Canadians as they approach the end of their working careers, according to survey results released today.

For the majority of Canadians — 73% — the primary concern is just to maintain their current standard of living, according to a survey conducted by SECOR Consulting and Leger Marketing.

Younger Canadians still seem to have an idealized view of retirement, with 36% of respondents between 18 and 24 years of age saying they plan to travel the world. Among those over the age of 55, that falls to just 8%, as they get a better idea of just how much money they will have to live on in retirement.

“It seems increasingly important for people to understand how much money will be required to support their current lifestyle through retirement, and consequently, retirement planning is increasingly complex,” says Louis Regimbal, partner at SECOR.

Some of the findings are not new, such as the expectation to work at least part time in retirement — almost half of Canadians between the ages of 45 and 54 do not plan to retire fully — either to remain active or to supplement insufficient retirement income.

Regimbal says longer life expectancy has resulted in increased uncertainty, not only because retirement savings will have to last longer but also because inheritances will be smaller and come later in life.

Most respondents said they would probably be about 60 years old before they received an inheritance. By that age, they are likely to be a little more concerned about funding retirement than embarking on a world tour.

“Canadians expect to inherit later in life, when their financial needs shift from paying off debts to supporting themselves in retirement,” says Dave Scholz, vice-president at Leger Marketing.

Among those over the age of 64, one-fifth say they will likely pass their inheritance on to their own children, rather than spending it themselves.

“The implication for both Canadians and their financial advisors is the need to look at multi-generational relationships, products and services in a more holistic way,” says Jean-Pierre Sablé, partner at SECOR. “This also requires financial institutions to develop more global products and services to meet international aspirations of the next generation.”

Still, only half of Canadians across all age, ethnic and wealth segments are discussing money matters with parents or children. Among those who have had this discussion, only 4% said it was initiated by their financial advisor.

Regimbal says this will likely change, however, as wealth management firms race to secure assets as they transfer from one generation to the next.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com