Canadians still struggling to save for retirement but slightly more optimistic
TORONTO - Canadians are feeling increasingly optimistic when it comes to retirement.
A Sun Life survey conducted in November has found that, on average, Canadians now expect they will be able to retire by age 66. That's one year earlier than the average response in a survey a year ago and down from age 69 in a survey in 2011.
Sun Life Canada president Kevin Dougherty says Canadians are starting to feel better as they put more time between themselves and the financial crisis of a few years ago.
"2011 was a couple of years into the (financial) crisis, and I think it had really been weighing on people," Dougherty said. "It's now five years . . . (since the crisis hit) and we're seeing that people are feeling better."
However, while respondents on average feel more optimistic about their chances of retiring near the traditional age of 65, those closest to retirement are still unsure.
The survey found so-called Baby Boomers, those age 55 to 65, on average don't expect to retire until age 67, with many saying they think they will need to work much longer.
When asked how satisfied they were with their retirement savings, 38 per cent of respondents overall said they were satisfied, up from 34 per cent last year.
Eighty per cent said they were confident they will be able to â€œtake care of basic living expensesâ€ in retirement, while 71 per cent were confident about their ability to â€œtake care of medical expensesâ€ in retirement, compared with 69 per cent the year before.
"These year-over-year increases are small to be sure, but together, they appear to indicate a reversal in the pessimism that has been so much a part of this study since 2010," the report said.
"Clearly, it is premature to call it a trend, but answers to several questions point to an easing of the anxiety."
Dougherty said people's attitudes were also dependent on how well-prepared they felt for retirement.
"If you have a plan or you have and adviser and you have a savings plan at work, you're feeling much better about where you're going to land," he said.
Adrian Mastracci, a portfolio manager and financial adviser at KCM Wealth Management in Vancouver, said the best way to avoid gloomy thoughts about retirement is to start planning and saving early on.
It also helps to make a projection about the income that will be needed for retirement at least 10 to 15 years in advance and to update it regularly.
"You have to stand back and say, 'What's it going to take for me?' That's really what it comes down to," said Mastracci.
"Once you look at it that way, you're going to see maybe it's not so critical. You may have to wait another year or two or three before you retire, but maybe you can retire with a partial income or partial employment. There's all kinds of ways to get to where you want to be."
Dougherty said he was also surprised by the survey results on how people expected to pay for retirement. It found that nearly a quarter of Canadians expected their homes to be their primary source of income when they leave the workforce.
Another 17 per cent said they weren't quite sure whether their home would be a source of retirement income but considered it might be â€” meaning as many as 35 to 40 per cent of Canadians may rely on their homes to fund retirement.
Such a plan, Dougherty cautioned, comes with its unique set of risks.
"If you've lived through downturns in real estate markets in Canada (you'll know) it's really amazing how fast and how dramatically real estate prices can change when they move," he said.
"It's not as stable an asset as people may think."
Overall, respondents expected 10 per cent of retirement income to come from home equity, 30 per cent from government plans, 27 per cent from personal savings and 23 per cent from employer plans, with the remainder coming from inheritance and other sources.
The low percentage attributed to company plans, said Dougherty, reflects the fact that many Canadians don't have pension plans at work.
The Sun Life results are based on an Ipsos Reid poll conducted online between Nov. 12 and 20 with a sample of 3,005 working Canadians between the ages of 30 and 65. The polling industry's professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.
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