Almost half of pre-retired Canadians above the age of 45 are not fully prepared for a comfortable retirement, according to the results of a recent survey.
In the Ipsos Reid survey commissioned by the Canadian Institute of Actuaries (CIA), specific results for pre-retirees include:
- Only 45 per cent agree that they are confident in their financial future – 34 per cent disagree;
- One in five (20 per cent) say they will never fully retire; and
- Just one in 10 (8 per cent) are "very prepared" for retirement – 42 per cent are not prepared (13 per cent "not at all", 29 per cent "not very").
The survey also found that while approximately half have every intention of planning for life after work, a similar number are not seeking financial advice of any kind, whether it is from a bank, a specialist adviser, a relative or even a book.
CIA President Robert Howard says: "It is interesting – and alarming – that despite the best of intentions and a clear understanding of the risks of not being adequately prepared, too many pre-retired Canadians have yet to take action to protect themselves financially for the future."
Howard also points to the fact that 72 per cent of pre-retired Canadians are concerned about maintaining a reasonable standard of living in retirement and what impact increasing health care costs will have on their savings and overall quality of life.
The CIA is concerned that this group of Canadians, with about 20 years left in the workforce, will reach retirement financially unprepared. “We encourage all working Canadians to start preparing as early as possible for their retirement years," Howard says.
Retirement Risk: Defining retirement horizons
is a report published by the CIA as part of its ongoing public policy commentary. It is based on the results of the Ipsos Reid research which surveyed more than 2,000 Canadians, split between pre-retirees (adults over age 45 who are not retired) and retirees (adults over 45 who identify themselves as retired). The goal of the research was to assess Canadians' awareness of, planning for and management of retirement risks.
The survey and report also focused on three distinct stages of retirement:
Stage I: The period where retirees' needs and abilities are essentially the same as in pre-retirement.
Stage II: The period where retirees will be somewhat less able to do what they used to.
Stage III: The period where retirees believe they will be much less able to do what they used to.
1) Pre-retirees need to take responsibility for their financial future and start taking action now to fully understand the risks, manage them and determine the best plan for retirement.
A large number of Canadians will experience a lower standard of living in retirement with depleting savings and health care costs if they fail to act early. Only 53 per cent of pre-retirees are seeking financial advice. This suggests that the need for guidance in retirement planning is not being acted on enough, particularly with too many respondents failing to consult with anyone with regards to financial planning. An increase in the level of savings by pre-retirees, especially those who are not saving but should be, is very much needed.
2) Retirement planning needs to be focused on the longer term: all three stages of retirement.
81 per cent of pre-retirees recognize they will be somewhat less able to do what they used to (Stage II) and 63 percent believe they will be much less able to do what they used to (Stage III). However, 53 per cent of pre-retirees have focused the majority of their planning only on Stage I - where needs and abilities are essentially the same as in pre-retirement.
3) Pre-retirees need a better handle on their capital requirement needs and retirement strategy.
Pre-retirees have mixed views on plans to withdraw principal amounts from savings or investments during retirement. Two in five pre-retirees simply don't know if this will be required. While a significant number expect to receive income from government, 21 per cent believe the amount received from CPP/QPP will go down during their retirement. This indicates that a number of Canadians do not fully appreciate that the CPP/QPP has been placed on a sound financial footing for many years to come.
"There is clearly a need for education on retirement strategy, long-term care, and access to information," Howard says. "With the current economy less than ideal, it is only natural to focus on today rather than tomorrow. But it is important for Canadians of all ages to seek advice about their financial future, and equally important for the Institute to alert Canadians to the realities they will face if they are unprepared for retirement."
The CIA hopes the survey results will urge Canadians to develop an action plan in order to ensure a secure financial future.
Recently, the CIA briefed many ministers and their officials on the Institute's White Paper on Government-Facilitated Retirement Income Plans and Canada's actuaries are ready to work with governments on the planning and implementation of potential changes to the system.
The Canadian Institute of Actuaries is the national organization of the actuarial profession. The Institute is dedicated to serving the public through the provision, by the profession, of actuarial services and advice of the highest quality. In fact, the Institute holds the duty of the profession to the public above the needs of the profession and its members. Actuaries employ their specialized knowledge of the mathematics of finance, statistics and risk theory on problems faced by pension plans, government regulators, insurance companies (both life and property/casualty), social programs and individuals.
For more information on the Retirement Risk: Defining retirement horizons report, visit
For more information on the White Paper on Government-Facilitated Retirement Income Plans, visit