Many Canadians are not in control of their retirement start dates, according to a survey by Toronto-based Royal Bank of Canada, and as such advisors need to make sure clients have a back-up plan ready.
According to the RBC 2013 Retirement Myths and Realities Poll, 80% of Canadians believe they will set the date for their retirement. However, 41% of respondents who are currently retired did not choose when they stopped working. Survey respondents cited employer decisions and health issues as the two leading causes for an unexpected early retirement.
More specifically, many survey respondents who are currently working said they intended to continue doing so at age 68, said Amalia Costa, head, retirement strategies and successful aging, RBC, in Toronto. But in fact, most people who had already retired reported doing so at age 58.
As such, Costa says advisors need to start having conversations with clients around retirement income planning earlier and to have back-up plans ready. Says Costa: “It’s important to have an alternative plan.” If a client has a Plan B in place they will not be caught off guard if forced into early retirement.
While many Canadians aren’t choosing exactly when they retire, according to RBC most don’t have any regrets about having done so. Survey results show that 72% of retired Canadians felt that they retired at the right time. The three top reasons for individuals’ satisfaction with the timing of their retirement include being able to enjoy an active retirement while in good health (79%); having sufficient funds available (37%); and being unhappy at work (26%).
Advisors need to take a more active approach in giving advice, says Costa, to make sure the client’s transition into retirement goes smoothly. “What I mean by more active is that a lot more decisions are being made that are beyond the investment decisions,” she says, “decisions related to the retirement transition itself.”
For instance, discussions around when to start taking Canada Pension Plan (CPP) payments, as well as tax and estate planning are going to be more immediate and impactful for a client about to retire than someone who is just starting to accumulate wealth for retirement.
Poll results were gathered from 2,159 online interviews completed by Canadians aged 50 years or older with household assets of at least $100,000. Ipsos Reid conducted the surveys between February 27 and March 12, 2013.