A new study has found that only a third of people over the age of 50 can afford to retire in their desired timeframe.
The National Institute on Ageing published a report on Wednesday that revealed of all employed Canadians aged 50 years or older, only 35% will be able to afford retirement at their desired age.
“The dramatic rise in inflation that emerged as a result of the COVID-19 pandemic has resulted in today’s cost of living being even higher than anticipated. Canada saw the most substantial increase in the Consumer Price Index since 1982 in 2022,” reads the report.
“As a result, older Canadians dependent on fixed income beyond government sources like the Canada/ Quebec Pension Plan, Old Age Security and the Guaranteed Income Supplement are at risk of being unable to afford basic daily expenses, let alone the care they may require.”
Another third of respondents, 39%, said they would not be able to afford retirement at the age they desired under their current financial position.
About 25% of respondents said that they felt unsure as to whether or not they could retire within a desired timeframe.
“Of course, saving for retirement and being prepared for that is a bit of an unknown and a bit of a challenge because … the availability of workplace pensions and other sources of income have changed over the past few decades,” co-author of the study and executive director of the Environics Institute Kieth Neuman told BNN Bloomberg in an interview.
Neuman mentioned that it was important to note the cohort of Canadians who don’t necessarily want to retire as well.
“There’s a certain proportion of older Canadians who don’t plan to retire, who don’t want to retire. Not everybody does,” he said. “We did ask people who had retired how they’re enjoying it and they tend to think it’s going better than they thought it might. So there is some positive news there.”
However, there are also Canadians who are over the age of 80 years who remain working but do wish for retirement.
“Among them, only about half feel that they could do so,” said Neuman.
Co-author Natalie Iciaszczyk said that older Canadians are “doing pretty well in terms of their financial wellbeing.” Iciaszczyk also serves as the research program manager at the National Institute of Ageing.
“Three-quarters of Canadians 50+ reported that their income is enough for them in 2023, with one-third (33%) saying it is good enough and they can save from it, while 39% said it is just enough to avoid major problems,” reads the report.
“One in four Canadians 50+ said that their income is not enough for them (either they are financially stretched [17%] or they are having a hard time [7%]). These results are consistent with 2022 numbers. The view that one’s income is good enough rises with age: it was least prevalent among Canadians aged 50–64 years (28%), increased for those aged 65–79 years (37%) and was highest among those aged 80 years and older (46%),” it continued.
With 39% of respondents saying they only had enough money to get by, Iciaszczyk said that this “signals the first red flag when thinking about our older population in that only so few of them are able to save.”
“What does that mean for when they reach older ages and are no longer working?” asked Iciaszczyk.
“Hopefully in the next three to four to five years we’ll be able to tell if these numbers and proportions are staying consistent, (whether) they are increasing as a greater share of our population does enter 65 and older.”
The latest report from the NIA is the second in a series that is part of a 10-year project.
Retirement readiness levels have remained virtually unchanged since coming out of the pandemic in 2022, according to the report.
“As people get older, in many ways, their outlook is looking better, but this retirement readiness issue persists, to some extent, even across older age groups,” said Neuman.
