Almost half of today's 50-59 year olds have less than $100,000 saved for retirement; many plan to use employment income in retirement to make up for lost savings
TORONTO, Aug. 20, 2012 /CNW/ - A new CIBC poll of Canadians in the heart of the baby boom (aged 50-59) shows that while retirement is just around the corner for many, they have come up short on their savings goals and plan to supplement their income by working in retirement. The poll, conducted by Leger Marketing, focused exclusively on Canadians aged 50-59, providing a unique perspective on Canada's largest demographic as they approach retirement.
Key findings of the poll include:
- On average, Canadians in their 50s plan to retire at age 63, but 53 per cent say they'll keep working in retirement, with most planning to work part-time
- 61 per cent say they have fallen short of the savings they expected to have in their 50s
- 45 per cent say they have less than $100,000 put away to fund their retirement
- Only about half (49 per cent) of Canadians in their 50s have met with an advisor in the last year - but those that did were feeling more positive about their finances
"The retirement landscape is shifting as the baby boomers reach traditional retirement age with a smaller nest egg than they expected to have," said Christina Kramer, Executive Vice President of Retail Distribution and Channel Strategy for CIBC. "Many Canadians are now planning to draw on multiple sources of income including employment to fund their retirement, and that makes getting advice about how to manage your income, savings, and investments even more important."
Boomers Missing Their Savings Goals
Many boomers in the survey felt they had come up short of what they expected to have saved by this stage in their life, with 45 per cent having saved less than $100,000.
The good news for boomers is that their late 50s and early 60s can be good years for building savings, particularly if cash flow improves as debts, such as a mortgage, are paid off. Those who plan to continue working in retirement may be able to leave their savings untouched for a number of years, using the income from their employment to replace what they would normally draw from their retirement savings.
"Even though you may have fallen short of where you had planned to be in terms of your savings, the years just before retirement can be some of the best years to further your savings and put money away for the future," added Ms. Kramer. "Take advantage of the opportunity to add whatever you can to your savings even if your planned retirement from full time work is only a few years away."
Part Time Work tops the list of options for those planning to work in retirement
The poll shows that Canadians in their 50s don't plan to keep working at their current job when they retire, but are looking to find a balance between staying active, earning income, and having time for themselves.
- 53 per cent of Canadians in their 50s plan to work in retirement - within this group part time work was by far the most popular option (37 per cent)
- 29 per cent are not sure yet if they will work once they retire
- 14 per cent said they would not work at all once they retire
While the income earned from working in retirement can add to savings plans, only one-third (33 per cent) said they would work just for the money. Two-thirds (67 per cent) see working as a way to either stay socially active, or find work enjoyable and want to stay involved in the workforce in some capacity.
"For Canadians using employment income to augment their savings and other sources of income in retirement, it's important to plan for the unexpected, such as an illness that may prevent you from working as much as you would like," added Ms. Kramer. "Work with an advisor to structure your finances so that you have considered a number of scenarios around your retirement income to ensure you are prepared."
Financial Advice Becoming More Important
With lower savings balances and an expectation of working longer, planning for retirement income can become more complex. Poll results showed that Canadians in their 50s who had met with an advisor sometime in the last year were somewhat more positive about their overall finances than those that did not seek out advice:
- 63 per cent of those who met with an advisor said they were positive about their finances today
- Among those who had not met with an advisor at least once in the last year, only 51 per cent said they were positive about their finances.
"In some respects, retirement planning can be more complex when you are using multiple sources of income and trying make your savings last," added Ms. Kramer. "A conversation with an advisor can help bring clarity to how all of these elements can work together."
Ms. Kramer noted that there are many considerations for those choosing to work in retirement, including how much they'll be able to earn from their work, how long they'll be able to defer drawing on their savings, and any tax implications based on their income level in retirement. "Understanding how all of these elements of your retirement plan fit together can go a long way towards making you feel more confident about your finances as you approach retirement."
Tips for Retirement Planning
- Meet with an advisor - as boomers consider their overall income picture and work to make their savings last longer, working with an advisor can help to bring clarity to how these various elements of your retirement plan fit together.
- Keep building savings - Once you have paid off your mortgage or other debt obligations, cash flow will improve significantly. Some of your best savings years can be in your late 50s and into your 60s, so there is still time to ramp up your savings and put more money away before retirement.
- Understand your tax situation - Working in retirement may have an effect on government benefits or other payments you may be expecting to receive. An advisor can help you understand how to optimize your individual situation.
- Prepare for the unexpected - relying on additional income from work in retirement does carry risks, particularly if an unexpected health concern limits your ability to work. Always plan ahead and consider how you would manage your finances if you could not work as long as you planned to.
Supplementary Data Points
Average age at which Canadians currently in their 50s plan to retire, by region:
|National Average - 63 years of age|
Percentage of Canadians who said they plan to work in retirement, by region:
|National Average - 53%|
Amount Canadians in their 50s have saved for retirement, by region:
|Under $10,000||$10,000 - 49,999||$50,000 - 99,999||$100,000 - $199,999||$200,000 - 499,999||$500,000 - 999,999||$1,000,000 +|
Percentage of Canadians that have seen a financial advisor, by region:
|National Average - 49%|
Results are based on a CIBC poll conducted online by Léger Marketing via its LégerWeb panel, the largest Canadian-owned survey panel, which is comprised of more than 400,000 households. The survey was held in every province of Canada with a representative sample of 805 pre-retired Canadians aged 50 to 59 years, between July 5th and July 8th, 2012. A probabilistic sample of 805 respondents would yield a margin of error of +/- 3.45%, 19 times out of 20.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information:
Sean Hamilton, Communications and Public Affairs CIBC at 416-304-8456, [email protected]