More retirees than ever, census finds

Advisors looking to add some new clients to their roster might want to look at retirees. With more than 4 million seniors living in Canada, helping an aging population through their golden years could mean big business.

On Tuesday Statistics Canada released its 2006 census findings on age and sex. The survey showed that more Canucks are of retirement age than ever before. Last year seniors made up 13.7% of the country’s total population, and it’s predicted that number will double in 25 years.

With more people hitting 65, advisors with retirement planning expertise are a necessity. “We’ve already noticed a change in the demand for services like retirement planning and estate planning,” says Cynthia Kett of Stewart & Kett Financial Advisors.

Debbie Ammeter, vice-president, advanced financial planning at Investors Group, agrees with Kett. “Retirement planning is a huge financial planning need and service that planners can provide. The aging population points to an opportunity for planning for seniors and baby boomers approaching retirement.”

One change some planners may have to make is thinking beyond the usual 90 years for a client’s life expectancy. The census found there are now more than 4,500 centenarians, up 22% from 2001. Statistics Canada predicts that that number could more than triple to about 14,000 by 2031. For the first time, there are more than 1 million octogenarians in Canada, a 25% increase over 2001, as well,.

“You should be planning for a longer life,” says Ammeter. “More people are making it past age 80, let alone making it to over 100, and that’s why planners really need to be factoring in the longevity of Canadians. It’ll make a big difference to the retirement resources they’ll need.”

Kett says the over-80 crowd is a growing client base for financial planners, as older retirees have needs that newly retired seniors do not. For healthier octogenarians, costly travel and medical insurance are two areas in which advisors can provide assistance.

“As far as they’re concerned, life is not over,” she says. “How do we provide the financial tools that they will need in order to continue to live life well?”

Advisors are already asking themselves those questions, says Ammeter. She says most financial planners do plan beyond 90. “I think that has started to shift, but these statistics drive home the point even more that you should be using a longer lifespan.”

Complicating matters is that 64.6% of people over 80 are female. That means advisors will need to plan for women whose husbands have passed away.

“It’s even more important that you look at the financial planning needs of female clients,” says Ammeter. “Sometimes there are heightened financial planning issues, because women are more inclined to take time off work for various care-giving roles, even in their senior years. That can affect the ability to earn and save sufficiently to cover longer lifespans.”

But advisors shouldn’t focus all their attention on the retired population. StatsCan reports that 3.7 million Canadians are between the ages of 55 and 65, making up 16.9% of the working-age population. By 2016 one in every five workers will be at least 55.

“Canada has never had so many people close to retirement,” says Statistics Canada in its 2006 census analysis. “In about 10 years Canada may have more people at the age where they can leave the labour force than people at the age where they can begin working.”

With so many people close to giving up their day jobs, advisors need to start talking to their clients about retirement now, and not wait until that day comes. “When people are approaching retirement, planning becomes that much more important,” says Kett. “The time to accumulate and save and reduce liabilities is becoming much shorter.”

But, Ammeter says, just because a client is hitting 65 doesn’t mean he or she will retire. In fact, Investors Group found that more and more boomers are planning either to work after they have retired or to phase out employment gradually. She says advisors should account for later working years but also plan for worst-case scenarios, like when illness forces early retirement.

“We did a survey in 2006 which indicted that 21% of retired Canadians encountered health conditions that forced them to retire early,” says Ammeter. “It’s necessary that financial planners help clients plan for those contingences in life.”

There is no denying that an aging population will have serious implications on several things, such as health care and where Canadians spend their investment dollars, but in this case, Ammeter doesn’t think change is a bad thing. “This means more flexibility for the boomers who say they want to continue working. It’ll also get the public thinking about issues that affect our most senior members of society.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com

(07/17/07)

Bryan Borzykowski