Canadian retirees breathe easier

The fallout from the global financial crisis has seeped into the retirement experiences of North Americans and reflects the disparate regulatory regime and savings cultures of Canada and the U.S., according to a study.

TD Bank Financial Group’s North American Report on Retirement survey of 1,002 retired Canadians and 1,009 retired Americans finds that Canadian retirees are faring far better than their U.S. counterparts. American retirees are twice as likely to worry that they might run out of money while Canadians are twice as likely to be living their retirement dream.

Worlds apart “As a North American institution, we have an enduring focus on what our clients are experiencing on both sides of the border,” says Frank McKenna, deputy chair, TD Bank Financial Group. “We’ve seen firsthand that the financial crisis and resulting economic impact has been tough on everyone. However, north of the border, Canadians’ more conservative approach to finances and our country’s intact banking system have given retirees greater peace of mind and an increased likelihood of living out their retirement the way they planned.”

Close to 70% of Canadian retirees say that their retirement is exactly or mostly what they were expecting, compared to 47% of Americans. One in four Americans say that they are not living their retirement dream at all and 29% of American retirees say their retirement is very different from what they imagined.

American retirees are also more concerned about their finances than their Canadian counterparts, with 38% of Americans saying they definitely did not save enough money compared to 21% of Canadians, and 21% of Americans worried they did not start saving early enough compared to 10% of Canadians who feel the same way.

“There is a somewhat negative stereotype that Canadians are staid when it comes to finances,” says Patricia Lovett-Reid, senior vice-president with TD Waterhouse Canada. “Perhaps, but when it comes to banking and investing, staid is good.”

According to the report, the recession has impacted the lifestyles of retirees on both sides of the border, but to a different extent. Half of Americans surveyed are now spending less as a result of the recession compared to 37% of Canadians. One in four American retirees are worried they will run out of money compared to 12% of Canadians, and 28% of U.S. retirees say they might need to find a job to supplement their retirement income, compared to 10% of Canadian retirees.

Take it from me… In terms of advice for younger generations, U.S. retirees recommend taking better care of one’s health (53%) and sharing their retirement vision with their spouse before retiring (50%), followed by maxing out their 401Ks (38%). Canadians are more focused on their financial health, suggesting that future retirees max out an RRSP (48%) and then to talk to their spouse about retirement dreams (46%) followed by taking care of their health (36%).

“These findings reflect my experience in both countries, that while Canadians and Americans are incredibly similar in many ways, there are significant differences in attitudes and behaviours,” says McKenna. “With an aging population in both countries, it is essential to understand the current experiences of retirees, both positive and negative. There are learnings from today’s retirees on both sides of the border that can help to inform their respective neighbours as they plan for their future retirement.”

Retirees from both sides of the border are quick to point out their greatest retirement mistake as not saving early enough, according to 28% of Canadians and 32% of Americans. As for the best thing they did to prepare for retirement, working for a company with a matching retirement savings plan or pension plan was noted by 39% of Canadians and 27% of Americans, along with living within their means (28% of Canadians and 27% of Americans).

“Living within your means is ideal, particularly if you know what those “means” will look like in retirement,” says Lovett-Reid. “What you want for retirement are a series of choices, not a series of takeaways.”

(02/11/10)