Horizons Retirement Report 2014



Clay Gillespie

Managing Director, Financial Advisor & Portfolio Manager


Horizons Report 2014Every year, we commission a survey (conducted by Concerto Research) to explore what Canadians are thinking and feeling as they approach retirement. The survey respondents are 3 to 7 years from retirement. We find this information useful when we are helping our clients prepare and design their financial plans. 

This year, we also did a survey of Canadians who have been retired for between 5 and 10 years. We wanted to know what Canadians are thinking after they have transitioned into retirement. It is useful to compare and contrast what these pre- and post-retirement groups are thinking in the same year. Specific events can change responses and thus surveying two separate groups at the same time is quite meaningful– for example, in 2009, during the last stock market correction, stock market volatility was a much bigger concern for both groups than it is today. 

The retirees and pre-retirees both thought that health was the key to happiness in retirement (49% pre-retirees and 56% post-retirees). When asked, “What areas do you have concerns or worry about?” there were four items that were of significant or moderate concern for the pre-retirees: 70% were worried about having enough money; 69% were worried about health and fitness; 58% were worried about inflation levels and 62% were worried about market volatility. 

These numbers were not surprising, but what was surprising is some of the items that were not seen as a significant or moderate concern: 25% for filling time or not growing bored; 26% finding new challenges; 21% relationship with partner; 24% for supporting aging parents and only 20% were worried about supporting children or grandchildren. 

Canadians are generally optimistic about their quality of life: 51% expect their quality of life to be better than average; and about 47% expected it to be about the same.

As can be expected, retired Canadians tend to be more prepared than the pre-retirees:
  Pre Post
 Have a Will 80% 80%
 Have a written Financial Plan 53% 60%
 Have a Power of Attorney 49%  65%

About half (55%) of Canadians feel they are very emotionally prepared for retirement but only 35% feel they are financially prepared for retirement. 

As Canadians approach retirement, it appears that debt is becoming part of their lives: 11% of Canadians intend to have at least $50,000 or more of debt in retirement and an astounding 26% of Canadians intend to have at least $10,000 of debt in retirement. 

Hypothetically, we asked Canadians as they approach retirement which activities or lifestyle changes they would make if required: 46% said they would downsize to a smaller home; 24% said they would cut back on vacations and 21% said they would cut back on social activities. In addition, we asked what would be the most unlikely change they would make to their lifestyle and 58% said they would not move in with an adult child.
The most widely given advice from retirees to those planning for their retirement is a reminder to use the time they have now to prepare for the changes that come with retirement, specifically in the areas of finance, hobbies and health with 62% advising the pre-retirees to be realistic with finances and plan ahead. 

This is the fourth year of the survey and the results have been quite consistent over time. The concern about market volatility has continued to drop with 62% of pre-retirees seeing this as a moderate or significant concern down from 77% only a few years ago. 

Although not a huge concern, 24% of Canadians are concerned about supporting their parents while only a couple years ago only 12% were concerned. This is a trend that will be worth watching in the coming years. As we are reading in the press, financial literacy is an issue. See the chart below for some of the questions asked and the responses. 
The responses to these questions have been quite consistent over the years and these responses coupled with the lack of planning are quite alarming. At Rogers Group Financial, we strive to help our clients properly prepare and execute their retirement plans. Our clients typically only retire once and, thus, it might be difficult and stressful. But we help clients retire every day so we have seen the good and the bad, both financially and emotionally, and are  prepared to give the appropriate guidance as required. 

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