Let’s hope you like your job, or are in a position to get one you like.

The reason: on average you will be spending longer toiling away than you previously thought: for the first time since Sun Life Financial has been polling the retirement plans of working Canadians, more employees expect to still be in the workforce when they reach 66, or one year past “normal” retirement, than those who expect to opt for full-time retirement.

“We have been tracking this since 2008 and this is the first year that it crossed over,” said Kevin Dougherty, president of Sun Life Canada, when referring to the survey conducted by Ipsos Reid of 3,000 working Canadians aged 30 to 65. The survey indicated 32% of respondents expect to be working full-time at age 66 compared with 27% who expect to be fully retired at that age. Currently, on average, about 1,000 people a day reach 65, with the near-term peak of 1,500 a day a few years away.

In 2008, the same survey showed 16% of the similar aged group expected to still be working full-time at age 66 with 51% expecting to be in full-time retirement. The rest (33%) were expecting to be working on a part-time basis.

A number of factors have led to a change in expectations about working past 65 with the need for cash to pay basic living expenses being at the top of the pile. “I like my job” was the fifth most important factor of the five respondents were asked to rank.

In the 2008 survey, job satisfaction was the key reason for continuing to work past 65, while the need to earn income to pay basic living expenses was number five.

“There has been a real shift in the data,” noted Dougherty as “people have come to the conclusion they still need to be working at age 66 to make the numbers work.”

Dougherty noted retirement is a difficult decision and often out of the hands of the employee. Indeed, another Sun Life survey indicated that 70% of retirees “retired earlier than they [thought they] would have,” because of the effects of corporate restructurings or health issues.

The Sun Life survey generated another difference between those retired and those still working: on average, the bulk of retirees expect to have enough savings to survive, which is not the case for those still working.

Specifically, one in seven retirees (or 14%) believe there is a serious risk that they will outlive their savings; in contrast, 36% of working Canadians believe there is a serious risk that they will run out of cash. “It seems the next generation will be facing a different retirement maybe [compared with] the generation ahead of them,” said Dougherty, noting the smaller role now played by defined benefit pension plans and government programs.

So what’s the solution? Clearly, people have to save more and be more organized about it. Dougherty mentioned three examples:

  • Participate in the company pension plan. Currently 50%-60% participate, which means “Canadians are leaving about $3 billion on the table in potential employer matches.”
  • Use a financial adviser;
  • Set up a full financial plan that focuses on investments, taxes and insurance.

Source: Financial Post