Almost half of all North Americans aged 55 to 64 years are planning to delay their retirement, some even expect to work until the end of their days, reveals the Retirement Income Strategies and Expectations poll conducted by Franklin Templeton.
Further, more than half of them shall have to retire sooner than expected or had hoped. For example, 46% of young Canadian baby boomers want to delay retirement age and 15% feel they will have to continue to work all their lives, against 48% and 17% respectively in the United States. This proportion is even higher amongst self-employed workers: 22% do not plan to stop working!
46% of young Canadian baby boomers want to delay retirement age and 15% feel they will have to continue to work all their lives.
This high percentage underpins the fact that almost the fifth of the young baby boomers (21% in Canada and 17% in the United States) have no retirement savings.
As life expectancy goes up and it gets progressively difficult to save for retirement because of the high cost of living, we find that members of all generations are increasingly fearful of not being able to put enough money aside for their retirement.
Why your age could be working against you
The Franklin Templeton poll also brought out important differences within different age groups baby boomers. Thus, although they wanted to stay on in the labor market, more than half of the young Canadian and American Baby Boomers (54% and 60% respectively) in the above study retired sooner than expected. Compare these figures with only 32% of Canadians and 37% of American baby boomers between 65 and 73 years of age who retired earlier than planned.
Again, more younger Canadian baby boomers than older baby boomers had to retire due to circumstances beyond their control (34% vs. 20%). This gap is even more pronounced among the Americans, where the proportion is 33% among young baby boomers and 17% in the older population.
More younger Canadian baby boomers than older baby boomers (34% vs. 20%) had to retire due to circumstances beyond their control .
In 2009, when stock markets began to recover, many young baby boomers climbed the ladder in their careers, while older baby boomers approached retirement age during their most remunerated years. Ten years later, after a long stretch of bull markets, baby boomers, young and old, are once again in different life situations.
We find that many older baby boomers benefitted from the transfer of their parents heritage, while young baby boomers are experiencing a stressful experience, which is to find a balance in their more costly lives – because of the care they provide to older parents and the fact that they still have children financially dependent on them – while saving for a retirement that seems increasingly inaccessible to them.
More young Canadian pre-retirement baby boomers have a dependent family member, than their older counterparts (24% and 9% respectively).
More young Canadian pre-retirement baby boomers have a dependent family member, than their older counterparts (24% and 9% respectively). For these reasons, many young baby boomers could not save as much as they wished for despite reducing their personal expenses while also being obliged to withdraw part of their personal savings funds.
Why is it a bad time to be a baby boomer
The study concludes that,
- Among young baby boomers 73% fear that they have not saved enough to retire, and 86% say they are worried about their ability to retire.
- One-quarter of them are afraid of not being able to keep up their lifestyle once they retire. This fear seems to stem from the fact that more than one-third of Canadians who retired 11 years ago or earlier admit that their overall spending has increased since they retired.
- Another major concern highlighted by 18% of those polled, is the growing cost of medical and pharmaceutical expenditures.
- Within retired Canadians, 27% also expressed being concerned about the costs associated with self-help.
- Finally, a vast majority, more than 52% of Canadians surveyed are afraid of surviving their savings. This fear was lower among Canadians who were already retired with only 31% fearing that this could happen to them.
Why using an advisor could save your bacon
At the moment, almost half of the young baby boomers are using a financial services advisor. This group is overwhelmingly more likely to save for retirement than other baby boomers (96% vs. 59%).
Retirees who receive assistance from an advisor were more confident about their ability to generate sufficient retirement income to last more than 30 years.
No matter what generation an individual is coming from, getting advice and developing a savings and retirement strategy is an important step towards ensuring that they achieve their future goals.
The study goes on to suggest that retirees who receive assistance from an advisor were more confident about their ability to generate sufficient retirement income to last more than 30 years with 77% of Canadians believing that, they can achieve this objective as against only 45% those who do not use the services of an advisor.
While many people continue to live longer because of advances in health care, the probability of exhausting their retirement savings before their eventual death is growing. In addition to helping people save for retirement, advisors can be an essential resource to help retirees learn and gain access to various sources of retirement income.