Canadians to work through retirement: Poll

(December 21, 2004) Canadians are less concerned about their retirement plans, perhaps because they expect to continue working later in life, according to the 2005 TD Waterhouse RSP Poll. The survey found that two-thirds of respondents were not “stressed out” about their retirement planning.

“The findings are further evidence of a major shift in how Canadians think about retirement,” says Patricia Lovett-Reid, senior vice-president, TD Waterhouse Canada Inc. “It would appear that an aging population base, looming labour shortages, the decline in defined benefit pension plans and lower expectations of income from retirement investments have created a ‘perfect storm’ that is blowing away long-held notions of life after 65.”

Of the one-third who do find retirement planning stressful, the primary reason given was “uncertainty,” with 33% citing this as the cause. A lack of money was the second most common reason given, at 16%.

The report did point to gender differences, however, with almost twice as many women finding retirement planning stressful. Forty-four per cent of women admitted to stress, while just 27% of men agreed. This could reflect either the machismo of the male respondents or the historical wage disparity between men and women.

Or perhaps the old adage that a woman’s work is never done could be the explanation, as 40% of stressed women cited a lack of time, compared to 30% of men. Their longer life expectancy is also weighing on women, as they were more likely to worry about outliving their savings and the high cost of future healthcare.

One-third of respondents said they expected to work beyond age 65, with 25% expecting to work part-time and 8% full-time. But it appears they will stay in the workforce to satisfy needs other than finances, as about 75% of those postponing retirement said it was personal choice.

The poll also shows investors are more realistic about returns and inflation. It found a median expected return for all investors of 5% in 2005. Equity investors tended to be more optimistic, though, calling for returns of 10%.

“It’s no surprise that investor expectations are much lower than in the long bull market of the 1990s,” said Lovett-Reid. “And that is a healthy development, since more reasonable expectations usually translate into better investment choices. TD Economists project 3% to 6% returns in 2005 from Canadian and U.S. equities.”

On the cost of living, poll respondents were closer to official estimates from the Bank of Canada, saying they expect relatively low inflation, between 1% and 3%.

“All in all, the poll results definitely point to Canadians’ continuing return to the ‘rational investor’ model,” said Lovett-Reid.

But perhaps the lack of stress should be a cause for concern in itself, as a TD Economics report published earlier this year pointed out Canadians are joining the workforce later in life than their parents did and are living longer in retirement. Those planning to work, at least part-time, in their retirement may be in for less of a shock than those who look forward to rest.

TD’s fifth consecutive annual poll was conducted by Toronto-based research firm TNS Canadian Facts, between October 19 and November 4. A total of 1003 telephone interviews were conducted among a nationally representative random sample of Canadian investors aged 18 to 69, of whom 78% currently have an RSP. The survey results are accurate within plus or minus 3.1 percentage points, 19 times out of 20.

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