While vast majority are looking forward to retiring, survey finds generational split on expectations.
Franklin Templeton’s 2014 Retirement Income Strategies and Expectations survey found stark differences among Canadians both in their pursuit of happiness in their retirement years and the stress and anxiety that comes from thinking about their retirement savings and investments.
The survey, conducted in January 2014, polled Canadians aged 18 and over.
When asked how they believe their retirement will differ from previous generations, Canadian pre-retirees were pretty evenly split. (Pre-retirees aged 18 to 24 showed more optimism, with 37 per cent holding a better outlook for retirement.)
- Among respondents who have not yet retired, 31 per cent believe their retirement will be better than previous generations, 36 per cent believe it will be worse and 32 per cent believe it will be similar.
- Respondents aged 45 to 54 experience the greatest amount of pessimism about what retirement holds for them compared to previous generations, and experience the highest levels of stress when thinking about their retirement savings and investments.
- While “retire later” was the top response (66 per cent) among pre-retirees who were asked what they would do if unable to retire as planned due to insufficient income, nearly one-third (29 per cent) of retired survey respondents did not retire by choice.
“The survey findings highlight some very real concerns and uncertainty among Canadians over what they can expect in retirement,” said Philip Bensen, senior vice-president, head of National Sales – Canada for Franklin Templeton Investments.”
A variety of factors could be contributing to those concerns, including the increasing inability of government pensions and programs such as Old Age Security, to contribute to a secure retirement; lingering fears from the 2008 recession; and – for the millennial generation in particular – fears about employment in both the short- and long-term, and the impact that will have on their ability to contribute to RRSPs at an early age.
When asked how they would characterize the stress and anxiety that comes from thinking about their retirement savings and investments, respondents aged 18 to 24 and those aged 65 and over indicated the lowest levels of stress, with 40 per cent and 45 per cent, respectively, citing that their retirement savings and investments do not cause any stress or anxiety. Those indicating the highest levels of stress were respondents aged 45 to 54, with 78 per cent indicating at least some level of stress and 38 per cent labelling this stress as moderate or significant.
“It was interesting to see that the highest level of anxiety peaked 11 to 15 years before retirement, indicating that people begin thinking about their retirement income strategies earlier than expected,” said Michael Doshier, vice-president of Retirement Marketing for Franklin Templeton Investments. “When asked what they expect to be their top concern during retirement, pre-retirees aged 45 to 54 selected running out of money as well as concerns about health and medical issues—with each representing the top concern of about a third (33 per cent) of respondents in this age range. In the 55 to 64 pre-retiree age range, health and medical issues (39 per cent) began to exceed running out of money (32 per cent) as the top concern.”
There is a lot of uncertainty and concern among Canadians over what to expect in retirement and what can be done now to plan and prepare for it.
While “retire later” was the top response (66 per cent) from Canadian pre-retirees who were asked what they would do if unable to retire as planned due to insufficient income, nearly one-third (29 per cent) of retired survey respondents indicated that they did not retire by choice.
The survey also uncovered some potential missed opportunities for investors based on the vehicles that make up their retirement savings plan. Specifically, of the 22 per cent of Canadians who identified GICs and Money Market Funds as products that make up part of their retirement plan, half (51 per cent) claim these investments are the “primary” (22 per cent) or “secondary” (29 per cent) vehicles held in their retirement plan – a concern given that, in today’s rate environment, such investments tend to yield negative results after inflation is taken into account.
“There is a lot of uncertainty and concern among Canadians over what to expect in retirement and what can be done now to plan and prepare for it. We’re all in pursuit of retirement happiness and the best way to get there is to work with a financial advisor to help develop a tangible plan that reflects where you are and the appropriate investments get to where you want to be. With a clear plan in place, Canadians can focus on what’s important to them now, while having some peace of mind about what awaits them in their retirement years.”
Franklin Templeton’s Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,014 Canadians ages 18 and older.
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