Half of older Canadians have delayed their retirement because of mounting inflation, a new survey reveals.
The survey, commissioned by Bromwich+Smith and Advisorsavvy, found 54% of older Canadians have put off retirement this year because of increases in the cost of living.
Retirement Interrupted, the first of a two-part series conducted by Angus Reid, puts a 2022 lens on the financial challenges of those getting set to launch into the third act of life.
Four-in-10 older Canadians have delayed (or plan to delay) their retirement because they have too much debt, while 62 per cent have delayed retirement because they don’t have enough savings or investments.
Reasons given for delaying retirement include:
- Not enough savings/investments 62%
- Rising inflation/cost of living this year 54%
- Too much debt 40%
- Children still require financial support 26%
- Love my job too much to quit 23%
- COVID-19 pandemic 21%
- Taking care of partner/spouse 13%
- Taking care of a parent or other family member 10%
"Canadians are all feeling a bit exhausted from the last two years, between multiple waves of COVID-19 and a tattered economy," says Laurie Campbel with insolvency trustees Bromwich+Smith. "For those close to retirement, 2022 might seem like the best year to do so. But with inflation still high and bank accounts and retirement savings being depleted, it might be wise to ask yourself, can I retire in 2022?"
Sixty-three per cent of survey respondents were worried about never being able to retire.
Other concerns included:
- Worried about running out of money after I retire 71%
- Expect to retire within five years 54%
- Expect to retire within 10 years 49%
- Will have to sell my house in order to retire 25%
- Worried I will have to go back to work to afford the cost of living 24%
"The results of the survey are somewhat dispiriting,” says Advisorsavvy founder Solomon Amos. "There have been economic shocks throughout time, but the last couple years have tested many people, and put the importance of proper retirement planning into plain view."
Meanwhile, a RATESDOTCA survey shows almost a quarter of Canadian homebuyers expect home equity to fund at least some of their retirement.
- One-in-three have stretched their finances to purchase a home with retirement in mind. This buying behavior is most common among those aged 18-34 (49%) and less common for older homeowners aged 35-54 (31%) and 55+ (22%)
- 24% of Canadian homeowners plan for their home equity to fund at least some of their retirement in the form of downsizing, a home equity line of credit, reverse mortgage or mortgage refinance
- Homeowners who purchased within the past two years are three times more likely to expect their home equity to fund the majority of their retirement, compared to those who purchased earlier (17% versus 5%)
- 20% of those aged 18-34 say they spend 50-74% of their income on mortgage payments alone.
"The eye-watering prices of housing in Canada in recent years has coincided with a shift in the way people view housing," says John Shmuel, managing editor of RATESDOTCA.
"Traditionally, houses were a place to live and retirement savings were separate from that, but increasingly people are looking at homes as investment vehicles and are factoring the expected increase in equity into their retirement planning. That could create problems if the recent reversal in prices and increases in the proportion of payments going toward interest continue."