Coverage of the 2013 edition of the Sun Life Unretirement™ Index has focused largely on the percentage of Canadians who expect to be retired at 66. It’s a remarkable 27%, the lowest result we’ve seen since the study was launched in 2008. Clearly, Canadians’ long-held assumptions about retirement at or before 65 are slipping out of reach.
But there’s more going on here than simply the effects of a global financial crisis. As we reported, 37% of those who expect to work at 66 will do so because they want to, not need to. A lot of 66-year-old Canadians will get up every morning and go to work happily. They’ll be glad of the income of course, but that won’t be the only reason they will stay plugged in.
My team conducts this research project each year, so I get to spend a lot of time with the data. Here are seven findings that didn’t make it into the 2013 report, that provide a broader understanding of how retirement expectations are shifting:
- The Unretirement™ Index score has been ticking up since 2010. The index measures respondent optimism on a range of questions related to macroeconomic, personal finance and health issues, as well as government and employee benefits. Zero represents maximum pessimism; 100 represents maximum optimism. This year’s score is 42, up from 41 in 2010 and 39 in 2009. The results were much more positive in the first two years of the study. The index score was 50 in 2008 and 51 in 2009.
- A quarter of Canadians would like to see interest rates go up this year. They’re in the minority, to be sure. But more Canadians would like to see rates go up than would like to see them go down. Sixty-two per cent said they’d like interest rates to stay the same in 2013; 25% said they’d like them to go up; 13% said they’d prefer they go down. The Bank of Canada’s target for the overnight rate is 1%, a low number by historical standards. While low rates make it cheaper to carry debt, they also make it more difficult to save for retirement.
- Just one in five are optimistic about market returns this year. Twenty-one per cent told us that. Eighteen per cent are pessimistic and 40% are neutral. Another 21% don’t know what to expect.
- The financial crisis had a mixed effect on investment decisions. We asked Canadians how the volatility that followed the 2008 crisis affected their investing. Thirty-six per cent said there’s been no change. Twenty-two per cent have been avoiding or taking less risk with their portfolio, while 4% have been taking on more risk. Twenty-six per cent have not invested since 2008. (The research doesn’t tell us how many of that 26% invested before 2008.)
- More than half of Canadians are planning a phased retirement. The number is down from a year ago: 52% said they expect a phased retirement vs. 60% who said the same last year. The winding down process is expected to begin at an average age of 63.
- A third of Canadians lack sufficient financial knowledge to plan for retirement. Thirty-four per cent of Canadians said that about themselves. More than half (52%) told us they do have the knowledge needed to make a plan. Fifteen per cent don’t know.
- One-third is determined not to take on debt in retirement. Thirty-five per cent to be precise; that’s up from 32% one year ago. Twenty-one per cent of Canadians said they won’t retire until they’re debt-free. And more than a quarter (27%) said it does not matter to them if they die with debt left unpaid.
It’s worth repeating that this is a poll of 3,017 Canadians, aged 30 to 65. All respondents were employed at the time they were surveyed.
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