2016 Horizons Report

Clay

POSTED BY

Clay Gillespie

Managing Director, Financial Advisor & Portfolio Manager

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We are pleased to present the results of the 2016 Horizons Retirement Report. This report summarizes the dreams, fears, hopes and challenges of Canadians planning to retire within the next 3 to 7 years. At the same time, it asks questions of Canadians who have been retired 5 to 10 years to give the soon-to- be retirees a glimpse into the future.

The biggest concerns for the pre-retiree group are (in order of importance):

2016 Horizons Report
  1. Health and fitness
  2. Market volatility
  3. Having enough money
  4. Inflation levels
  5. Filling time and not growing bored

97% of Canadians expect their lifestyle to be the same or better than the average Canadian in retirement but only 48% of Canadians have prepared a written financial plan. Those who have a written financial plan expect to have higher monthly incomes than those without a written financial plan.

Additionally, 73% of Canadians describe themselves as being at least reasonably familiar with investing in the types of investments available. However, a small test on financial literacy seems to suggest otherwise.

  • What happens to bond prices when interest rates go up? Answer: They decline – 46% answered correctly
  • What is the maximum CDIC coverage for GICs? $100,000 - 41% answered correctly.
  • How much of a realized capital gain is taxed in Canada? Answer: 50% – 50% got this correct.
  • Which one of GICs, Canadian equity or money market accounts performed best in the past 10 years in Canada? Answer: Canadian Equity – 52% of the respondents got this correct.

The level of debt has remained constant through the years of us doing this report – 31% expect to retire and have debts greater than $10,000 and 20% expect to have more than $50,000 in debt.

Overall, Canadians nearing retirement feel much more prepared emotionally for their retirement than they do financially. 

If they had to reduce their living expenses in retirement, most Canadians would choose to downsize to a smaller home before cutting back on expenses. The least likely option would be to move in with their adult children.

While 92% of pre-retirees expect life to have a more relaxed pace after they retire, only 75% of retirees report a more relaxed pace to their retirement.

Travel is the most significant goal or dream that Canadians hope to accomplish once they retire, as 43% of Canadians consider travel to be their top retirement priority. Although travel is important, 28% of retirees reported travelling significantly less than they thought they would. Retirees also reported spending more time pursuing hobbies and helping with grandchildren than expected.

The most widely-given advice retirees had to share with Canadians still planning for retirement was a caution – Be realistic with finances and plan ahead.