Unlike many baby boomers who choose to continue working for social reasons or personal fulfilment, younger Canadians appear to be motivated more by financial pressure and uncertainty about their long-term security. · Morsa Images via Getty Images
For many younger Canadians, retirement doesn’t mean stopping work — just slowing down.
New findings from FP Canada’s Money and Milestones survey suggest a generational shift in how Canadians picture life after work. While half of Canadians are saving for retirement, more than a quarter (26 per cent) are saving for a version of retirement where they “work less,” compared to over a third (35 per cent) who are saving for retirement where they don’t work at all.
Among those aged 18 to 34, the share saving for semi-retirement and full retirement is nearly identical (21 per cent versus 20 per cent), a sign that younger Canadians are preparing for a more flexible, non-traditional version of retirement.
Unlike many baby boomers who choose to continue working for social reasons or personal fulfilment, younger Canadians appear to be motivated more by financial pressure and uncertainty about their long-term security.
“Some do it because they realize that it’s probably unrealistic to have a full retirement due to their current financial situation,” said Kelly Ho, certified financial planner at DLD Financial Group.
“They’re feeling pessimistic about their own trajectory,” she added, noting that housing and the labour environment are markedly different from the ones their parents experienced in young adulthood.
Longer life expectancy is also a factor, Ho says. Retirement could stretch from age 60 or 65 to as late as 90 or 95 — a whole other working lifetime. The thought of having enough money to fund that is scary, she notes. Canadians can feel particularly triggered when they hit their 40s, realizing that their working journey could be 20 years or less away.
Canadians should track where their money is going and how much they can reasonably set aside. They should also check whether they’re taking advantage of any retirement savings plans offered through an employer.
Saving can create an “illusion of choice,” Ho says. It appears optional because no one is making you do it. Here’s where seeking the advice of a financial planner or adopting an automated savings system can help.
Younger Canadians may also aim for semi-retirement, but health issues can disrupt even the best-laid plans. “If your health doesn’t allow you to do so, then it’s not an option,” Ho said.
Still, those who have a very intentional retirement, where they have a long-term routine and a sense of purpose, go on to live healthier lives than those who go into retirement shock, Ho says. As a result, semi-retirement can create a longer, more prosperous life, regardless of whether it’s done out of financial necessity.