The 2015 Horizons Retirement Report
BY CLAY GILLESPIE BBA CFP CIM FCSI
Many of our clients are concerned about what life will look like during their retirement years. For this reason, we started our retirement survey five years ago to explore what Canadians are thinking as they approach retirement.
Last year, we also included a group of Canadians who have been retired for between five and 10 years so we had an idea of what was going on in Canadians’ minds during the first phase of their retirement.
We use this data to help our clients better understand and guide them through the process of working toward retirement.
Highlights from the 2015 Report
■ Canadians tend to be very optimistic about their prospects for quality of life in retirement, with 97% expecting their retired life to be better than or about the same as the life of an average Canadian.
■ Only a little over half of Canadians planning to retire have prepared a written financial plan and understand how much income they can generate each year throughout retirement.
■ 56% of Canadians planning to retire feel somewhat well-prepared financially but only 36% reported that they feel very well prepared for retirement.
■ It is interesting to note that while 91% of Canadians expect life to have a more relaxed pace after they retire, significantly fewer retirees (63%) report that their life actually has a more relaxed pace in retirement.
■ 50% of retiring Canadians have put in place a Power of Attorney.
■ Moving in with adult children is the path Canadians reported as being the least likely to be considered if they needed to reduce their living expenses in retirement.
■ Over 30% of retirees expect to enter retirement with at least $10,000 or more in debt.
■ 71% of Canadians describe themselves as being at least reasonably familiar with investing and the types of investments available; but when asked four basic investment and planning questions, only 16% got all four correct.• Travel is the most significant goal or dream that Canadians hope to accomplish once they retire. 30% of Canadians consider travel to be their top retirement priority.
■ 84% of Canadians reported that they intend to be more adventurous in terms of their hobbies and interests after retirement, but only 42% of retirees indicated they have been more adventurous in this regard.
■ The median expected retirement income for Canadians is approximately $4500 per month.
■ Most Canadians are very confident that their marriage will adapt to the changes associated with retirement life, with women being slightly more confident than men.
In reviewing the data, it is very clear that the more you prepare for retirement, the more comfortable you feel as you approach retirement.
The two most disturbing trends in the survey:
1. The amount of debt that Canadians are carrying into retirement.
2. The disconnect between how much Canadians believe they understand about investing and retirement planning; when asked questions to verify their understanding, it turns out that a much lower percentage of retiring Canadians actually understand many of these concepts.
We believe that Canadians should do some retirement income planning at least five years before retirement so they have an understanding of how much income they will have in retirement. The more you plan and the more you understand, the better you’ll be able to design a retirement plan that will match your goals and objectives.
It is disappointing that only 53% of Canadians planning to retire have prepared a written financial plan. How can you make informed decisions about retirement if you have not done any analysis?
It is equally disappointing that only 50% of retiring Canadians have set up a Power of Attorney. This means that if these individuals become physically or mentally incapacitated, their loved ones would have to work with the government to decide what is best for them. Most Canadians do not want the government deciding what is best for them and would rather have their spouse or children or a trusted friend make the decisions that are required.
We would agree with the sentiments of the retired members in the survey when the number one piece of advice retirees had to share with other Canadians was a cautionary reminder “to be realistic with finances and plan ahead”.
If you want a full copy of the report, you can go to our website at www.rogersgroup.com and find the report under Find Resources.
If you have any questions about this report or any suggestions for future surveys, please do not hesitate to give us a call.