As longevity increases Canadians should find ways to save more and plan better to finance their retirement, two retirement experts tell BNN.
However, many Canadians are forced to continue to work well into their retirement years to meet their financial needs.
Find a cause that lights you up. Get in touch with a nonprofit that needs you.
But for other baby boomers, retirement is no longer a magical day on which they will stop working, get a gold watch and live a life of leisure, said Catherine Collinson, president of the Transamerica Center for Retirement Studies. More than 60 percent plan to work past age 65 or not retire, she said. “It’s not their parents’ retirement,” Collinson said. “Baby boomers plan and expect to work longer, delay retirement and transition into retirement in a way that involves at least working part time.” The majority of baby boomers, Collinson said, are delaying retirement out of necessity.
Planning for retirement is usually over-simplified and full of bad assumptions, like this one: "Assume you will need 70%-80% of what you earned pre-retirement." Well you won't be sending your children through college and maybe you will have your mortgage paid off. And you won't have commuting costs, or still be trying to save for retirement. But on the other hand you will have much higher medical expenses, you may be sending your grandchildren through college, you may be providing financial assistance to your children or your parents.
Economist James Poterba of MIT put it all together with colleagues at Dartmouth and Harvard's Kennedy School and estimated that about 46% of Americans die with less than $10,000 in assets, many of them lacking even home equity and relying almost entirely on Social Security. The results can be measured in more than merely dollars and cents. Poterba's paper found that this group is "disproportionately in poor health," in part because they have no resources to cover medical expenses outside Medicare.
For generations of Americans the right time to retire was usually determined by a number — one’s age. The “right” age to retire was often driven by a company pension formula, and most people assumed they would retire by age 65. Today, more than ever, a new number has emerged in its place — the amount of one’s personal savings. On the new road to retirement, Americans can now retire only when they feel they can afford to do so.
The study reveals that U.S. adults who volunteer report that they feel better, both physically and emotionally than adults who do not volunteer. Volunteers are more likely than non-volunteers to socialize and they do so more frequently. Most tell us that they have developed new friendships as a result of volunteering.
One reason many people are financially unprepared for retirement is that they tap into their retirement savings before they retire. They tap it when they lose their jobs, or at the onset of poor health, or to pay for a new home. A large percentage cash out retirement savings when they change jobs instead of rolling it over.
It's by far the largest study to look at this, and researchers say the conclusion makes sense. Working tends to keep people physically active, socially connected and mentally challenged - all things known to help prevent mental decline. "For each additional year of work, the risk of getting dementia is reduced by 3.2 per cent," said Carole Dufouil, a scientist at INSERM, the French government's health research agency.