Few Canadians looking to go traditional retirement route, finds report
The traditional path to retirement in Canada is dying, based on the findings of a recent study.
About three-quarters (74%) of Canadians between the ages of 24 and 44 say the conventional approach to retirement – where they stop working at age 65 to finally live a life of leisure – is an outdated concept.
Only seven per cent of 18- to -24-year-old workers are planning for traditional retirement, reports investment management service firm Wealthsimple.
Why do so many people want to retire early?
Over two in five (41%) they are motivated to retire well before age 55.
This is so they can chase bigger ambitions related to small business, consulting, not-for-profit, a passion project or creative pursuit, reinforcing a growing desire to work to live — or at least, not living to work for someone else, according to Wealthsimple.
More than half of 25- to 44-year-olds say they can’t conceive of having the savings to retire in the conventional sense.
“This new outlook on retirement is motivated by more than a challenging economic climate,” says Mike Katchen, CEO of Wealthsimple. “It’s a new perspective on the future driven by younger generations. They are looking for flexibility, personalization and control over their future, rather than feeling controlled by conventional wisdom.”
Currently, only 19% of 25-to-44-year-olds hope to grow their family, while 41% of them are still saving to purchase a home.
What is the fastest way to retire early?
Over half (55%) 18-to-24-year-olds see investing as a way to fulfill the ambition of retiring, finds Wealthsimple’s survey of 1,501 Canadians, conducted from Feb. 5 to 13, 2024.
A previous Mercer Canada study found that if employers provide workers with 100% matching contributions for their retirement savings, they can help workers retire a couple of years early.
If employers want to help workers achieve their ambition of retiring early, they can share with them the following tips from financial services firm Ramsey Solution:
- Determine what your goals are for early retirement.
- Create a mock retirement budget.
- Evaluate your current financial situation.
- Invest in a “bridge account” that will help you bridge the gap between your early retirement and the time when you can start taking money out of your retirement accounts without a penalty.
- Invest in real estate.
- Make lifestyle changes.
Over six in 10 (63%) of Canadians with household investable assets of at least $100,000 are somewhat (49%) or strongly (14%) confident in their retirement prospects, according to a previous report from research, consulting and professional development firm LIMRA.
However, roughly 60% of working Canadians do not have access to a workplace pension, according to Wealthsimple.
How do you keep older workers?
However, having workers retire early may not be the best option for employers, especially as many are struggling with labour shortages.
Here’s how employers can design benefits plans to attract and retain older workers, according to a report posted on the Society for Human Resource Management (SHRM):
- Stress the value of existing, traditional benefits.
- Offer flexibility.
- Focus on workers’ mental health and wellness.
- Promote financial wellbeing among workers.
- Offer pre-retirement work opportunities.
Many workers in the education sector are looking to continue working even past their retirement age, according to a previous survey.