Business

Canadians considering later retirement due to fears of inadequate savings

(Special) – Canadians are concerned about their savings and consequently many are considering delaying their retirement in order to save more money for their older years.

A survey by Franklin Templeton Investments has found that more than one fifth (21 per cent) of baby boomers aged 55 to 64 have not saved anything for their retirement and now are considering delaying retirement to save more money, with 73 per cent of young boomers in pre-retirement saying they feel stress and anxiety about their savings and investments.

The survey found that concerns over savings and investments also are affecting younger millennials, with 24 per cent saying they haven’t save anything for retirement.

The main reasons for this anxiety about saving hinge on a number of factors including increased life expectancy, increases in the cost of living and medical and pharmaceutical expenses.

“With life expectancy increasing and retirement savings becoming ever more challenging due to the high cost of living, we are seeing increased concern over having enough money for retirement across all generations,” says Matthew Williams, senior vice president of Franklin Templeton Investments.

The survey found that of respondents who plan to retire within five years, 86 per cent expressed concern about paying expenses in retirement. Twenty seven per cent ranked lifestyle expenses as their main concern while 18 per cent said medical and pharmaceutical expenses were their main concern. Thirty four per cent of respondents nearing retirement say they don’t know how they are going to pay their medical expenses in retirement.

As well, more than half of respondents nearing retirement in the next five years are concerned about outliving their retirement assets or having to make major sacrifices in their retirement.

It appears these concerns are well-founded. The survey found that 34 per cent of respondents who have been retired for 11 years or more said their overall expenses have increased since they initially retired. Twenty seven per cent of this group are most concerned about potential assisted living care expenses.

“Although it’s never too late to start saving, the best time to start contributing to retirement savings vehicles is when a person starts out in their career and may not have big financial commitments like a mortgage or childcare costs, and to find a way to maintain healthy savings habits as they age,” Williams says.

In an interview, Williams said with many retirement saving options today such as RRSPs, Tax Free Savings Accounts, company pension plans and government programs such as the Old Age Security and Canada Pension Plan, planning for retirement is a bit of a jigsaw puzzle. But there are four main principles people should follow.

The first is to participate in any employer-sponsored pension plans. Many of these could include features whereby the employer will match a portion of the employees’ contributions. “You want to be sure to take advantage of these arrangements fully so you don’t leave any money on the table,” Williams says.

The next is to prepare a retirement budget three to five years before retirement to give yourself time to think about and prepare for changes in your spending habits that can come about in retirement.

The third is to make sure you understand all of your sources of retirement income and the fixed and discretionary expenses that you expect based on the lifestyle you want to have and maintain in retirement.

And finally, get qualified professional advice and ask lots of questions. “Many people don’t have confidence in their abilities to do this planning alone, so getting professional help can really help to reduce anxiety and stress,” Williams advises.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Talbot Boggs , The Canadian Press