A Manulife MFC-T report says retiree experiences vary significantly based on when a person retired, and whether it was planned or earlier than expected.
While most people have a retirement age in mind, nearly half of them – 47 per cent – retired sooner than expected at an average age of 59, the company’s financial resilience and longevity report, published Tuesday, said.
Many Canadians intend to retire later but personal events such as worsening health or difficulty finding work due to ageism can push them out of the workforce earlier than anticipated, said Bonnie-Jeanne MacDonald, director of financial security at the National Institute of Aging at Toronto Metropolitan University.
“They may not think through all the consequences of early retirement on their financial security until maybe they’re out of the labour market,” she said in an interview.
Retiring early shortens the savings period and increases financial strain in retirement at a time when life expectancy is growing worldwide, the report showed.
The survey included 1,572 working Canadians with employer pension plans and 523 retirees and was conducted in May.
Canadians who retired as planned or later seem to have a significantly more positive outlook on their financial situation and resilience than those who retired early, the report showed.
Almost one in four early retirees considers their debt a problem, while more than half of them wished they saved more and adjusted lifestyles before bowing out of jobs early, the report added.
“Delaying retirement carries so many benefits,” said MacDonald.
“If you’re 55, you’re able to save so much more of your income than you could have when you (were) 35,” she said.
MacDonald said Canadians in their 50s are more likely to have paid off their mortgages and gone through an expensive phase of raising children.
“So, people can actually save so much more if they keep working,” she said.
The survey showed one in three respondents say they are worried about not having enough retirement savings, while 42 per cent of baby boomers say they’re behind in their savings goals.
MacDonald said inflation and high cost of living are the biggest financial fears for many people who are contemplating retirement or have already retired.
“When people say like, ’I don’t know if I’m ready for retirement,' it just signals that there (are) so many unknowns of retirement,” she said.
MacDonald said it is hard to prepare for the years to come, not knowing how long they would live or health care expenses they could see 20-30 years into the future.
The survey highlights the power of preparedness and that it is critical for people to reach financial resiliency during their working years for a comfortable retired life, Brett Marchand of Manulife Group Retirement said in a release.
He said an effective financial wellness program and comprehensive savings plans among other financial tools can help prepare better for the retirement years.
This report by The Canadian Press was first published Oct. 22, 2024.
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