Retirement Crisis in Canada šØš¦
Table of Contents :
Crisis.
Working Longer.
Grey Resignation.
Not Saving Enough.
Longer Lifespan.
Inflation.
My Perspective.
Disclaimer.
If you are worried about your retirement in Canada, believe me you are not alone.
With cost of living going up, it seems pensions are not keeping up with inflation, hence people are worried about their golden years.
Crisis
It is clearly evident that a retirement crisis is looming in Canada, where increased inflation and interest rates are multiplying the problem.
In such a challenging economic environment, I believe Canadians of all ages are finding it difficult, to save for retirement.
Latest survey showed, people close to retirement age are more concerned, how they're going to finance their old age.
82% of respondents aged 55 to 64, worry about inability to save for retirement, as cost of living has skyrocketed, which falls down to 51% for people aged 35 and under.
Clearly, I would be worried too in that situation.
Hope you get the idea.
Working Longer
Some Canadians closer to retirement, are more willing to continue to work according to Stats Canada.
More than half those surveyed said yes, if their employer allowed part time work.
This is a clear change from earlier times, when people would wait for retirement.
Question we need to ask is, why Canadians are now working longer in old age?
How come a person who started working from say age 25, to retirement age, still is not comfortable about idea of retirement at least financially?
Also 34% of about to retirees, would be motivated to keep working, if their boss gave them a raise.
Grey Resignation
To combat labour shortages, employers are giving inciting job offers to retain older employees, or even offering exciting packages for them to re-join.
Maybe the idea is to reverse effect of grey resignations.
I believe, it makes sense to retain old guard, and not focus on the young blood that needs to be trained.
A trend is clearly emerging, where deserving senior employees are offered flexible work schedules, attractive benefits package, or even career progression opportunities.
Don't get me wrong, this is not only happening in Canada alone, rather all western countries being in the same boat are following the same trend.
Not Saving Enough
Canadian government from time to time, have talked about underfunding of CPP, which is being gradually enhanced.
So today's workers can expect higher benefits at retirement, funded by small increase in CPP contributions.
Initially designed as a supplement, and never the only income source in golden years.
Because of multiple reasons, Canadians are not saving enough for retirement.
Just keep in mind, we are an economy of consumers who want instant gratification, and our economic model is based on debt.
As a result, rate of saving has been declining for decades, which is now negative, meaning we are borrowing today to survive for tomorrow.
Longer Lifespan
Baby boomers are now retiring, which is putting immense pressure on CPP.
Modern science has played a huge role, as far as increase in life expectancy of Canadians are concerned.
For sure, retirees are facing enormous challenges like, skyrocketing cost of living, inflation, their own health, and huge fluctuations in their retirement portfolios.
We Canadians do enjoy universal health system and old age pension at retirement.
No doubt, a tough economic environment affects public finances.
A retiree at 65 with life expectancy of 87, is going to put immense financial strain on our health care and retirement finances.
Inflation
Inflation in Canada still remains a formidable challenge for a common man.
Even though it has come down substantially from its peak, but this indirect tax is driving standard of living down for Canadians.
People have been curtailing their savings just to survive now, because of high inflation.
If you look around, wage growth is not keeping up with rise in housing, or even basic day today expenses.
Now imagine if you are a retiree or close to that age, you'll be tight financially.
Some retirees might be rich in assets, but surely cash poor, which makes their life not so great in this G7 country.
My Perspective
I believe, it is never too late to start planning for your retirement.
Remember one golden rule, it is your life and your retirement, so you should enter this golden age fully prepared financially.
Retirement planning should be a critical step, when you plan your finances.
The simple reason is, no matter how hard you try you cannot turn the clock back.
So act now, save for your future and invest it wisely.
Make use of multiple online resources, using which you can educate yourself.
Disclaimer :
As a disclaimer, Iām not a financial advisor please consult one before investing based on your personal financial situation.