Canadians rethinking retirement due to pandemic – RBC poll

The pandemic has Canadians rethinking their retirement plan, savings and timing, according to not-yet-retired Canadians aged 50-plus surveyed by the 2021 RBC Retirement Myths & Realities Poll.

The most immediate impact is that the pandemic has caused some Canadians to hit the pause button on their retirement date, as 18 per cent of respondents saying they will now be retiring later than expected.

Concerns around outliving retirement savings have reached their highest level in a decade, as 21 per cent of respondents with more than $100,000 in investable assets now expect to outlast their savings by 10 years (compared to 16 per cent in 2010).

Compounding what respondents are facing over the near-term is the fact that half do not yet have a financial plan, and only 20 per cent have created a formal plan with an advisor or financial planner.

“If you’re nearing retirement without a formal plan, there’s a shrinking window of opportunity to review your options, to see if you can enjoy the retirement lifestyle you’re hoping for,” says Rick Lowes, vice-president, strategy, RBC. “An advisor can help you translate your personal goals into financial ones and explore strategies to achieve them.”

Retirement-related issues

Poll respondents also indicated the pandemic has prompted them to either think about, or take action on, a number of retirement-related issues, including:

• Thinking more about where they will live in retirement (22 per cent)
• Deciding where they do not want to live (20 per cent do not want to live in a retirement home)
• Reviewing and updating wills and beneficiaries (15 per cent)
• Taking stock of their financial affairs (17 per cent)
• Taking up a new career or hobby, realizing “life is short” (16 per cent)

Canadians approaching retirement have also been resetting their retirement savings goals. Those with more than $100,000 in investable assets now estimate they will need to save $1 million on average – approximately $50,000 more than in 2019 – with more than three-quarters falling short of their goal by almost $300,000, on average. Meanwhile, those with less than $100,000 in investable assets have lowered their retirement savings goal – now sitting at $533,153 (compared to $574,354 in 2019) – but they have a much larger savings gap of $472,991.

Bridging the shortfall

To help bridge a shortfall during retirement, these groups responded that they would:

• Stay in their current home and live more frugally (37 per cent of those with more than $100,000; 36 per cent of those with less than $100,000)
• Return to paid work (31 per cent and 36 per cent, respectively)
• Downsize/move (31 per cent and 23 per cent, respectively)
• Ask a family member for assistance (lowest on their list of options, at three per cent and five per cent, respectively)

“We know from past polls that retirees will find a way to make their finances work, but this may mean they aren’t leading the lives they were hoping for when they retire,” says Lowes. “We’re here to help Canadians so they can focus on what truly matters to them.”