If there’s one thing that can be said about retirement, it’s that it’s getting longer and longer. A new report from HSBC Bank Canada on the future of retirement around the world says in 1900, the average length of retirement throughout the world was just over one year. By 1980, it had risen to 13 years, and by 1990 to 19 years. In the future, says the report, retirement is expected to span two decades or more. The Chinese expect it to last, on average, more than a quarter of a century.

Financial preparation was seen as extremely important for a fulfilling retirement. When asked which factors are important for a happy old age, “Not having to worry about money” ranked in the top three in seven of the 10 countries and territories studied.

HSBC claims its report is “the world’s most comprehensive study on global attitudes to aging and retirement.” It looks at 10 diverse countries and territories representing about 50% of the global population: Brazil, China, France, India, Mexico, Hong Kong, the U.S., Britain, Canada and Japan.

Marc Cevey, CEO of HSBC Investments Canada Ltd. in Toronto, points out that the group includes some G7 countries as well as developing nations in Asia. Although they have some commonalities, there are also vast differences. Canada was prominently featured in the study, says Cevey, and some results were “a bit surprising.” For one, he says, “Canadians not only think about retirement, but fully embrace the concept of retirement and are almost looking forward to it.”

Countries in the group have very different attitudes to aging, but what most societies have in common, says the report, is that people tend to retire and plan to retire before the age at which they say old age typically begins. The Chinese believe old age typically begins at 50, the study found, while the French say 71.

The idea of age itself has grown old, says the report. In the past, people thought of the onset of old age as being marked by an event such as a 65th birthday, retiring or collecting a pension. According to the report, “people now see old age as beginning with the decline of personal abilities, such as memory, eyesight and energy.” This is a much more personal and individualistic definition, the report notes. It means people become old at different ages: a 60-year-old may be “old,” while an 85-year-old remains youthful.

The report says Canada is unusual in that more than a third of Canadians have consulted a financial advisor, whereas India is more typical, with just 5%. But the report also says Indians view later stages of life as a time to live with and be cared for by their families. They do little to plan or prepare for retirement. Of all the nations studied, the researchers found that Canada was the best prepared for retirement.

Even so, only 24% of Canadians now equate later life with financial independence.
Cevey suggests that is partly because Canadians believe government plans will not provide enough to meet their needs in retirement. The survey also found Canadians don’t expect their families to take care of them, Cevey says. In fact, older people are more likely to take care of the younger generation than the other way around.

U.S. vs Canada

The report found some differences in attitudes to aging and retirement between Canada and the U.S. For example, 64% of Americans see retirement and later life as a time of reinvention and an “opportunity for a whole new chapter in life.” About 78% of Canadians shared that view, with only 22% viewing retirement as a time for rest and relaxation.

Increasingly, people expect to have second lives after they retire, but before they believe themselves to be old. Respondents in different countries and territories have different preferences about what they want to do in this second life, says the report.
Paradoxically, people in more affluent societies want to carry on working in retirement, even though they may have less financial need to do so. But the report says most people in most countries want a balanced lifestyle that includes periods of work, leisure and education — or a blend of all three at once, with the proportions changing to take into account the interests and demands of the moment.

@page_break@According to the report, “Canadians view their later years as a time of motivation, ambition, and close relationships with friends and family.” They see retirement as a new chapter of life, a time for personal challenges [including work and careers] and taking risks.” Canadians believe in preparation; they talk to professionals and friends about retirement, and frequently review their savings and investments.

Preparation is most effective when it is done early, says the report. But most young people do not prepare adequately for old age. Most also underestimate how long they are likely to live and what their financial needs will be in retirement, says the report.
Many think they will live no longer than the older people who are alive today, which most experts think is highly unlikely, the report notes.

Personal retirement planning and preparation varies considerably around the world — no doubt partly a reflection of different cultural attitudes to aging. The Japanese were the least prepared, while people in North America were the best prepared. Two-thirds of Japanese pre-retirees and about half of Brazilian, Indian and French pre-retirees said they had carried out virtually no retirement planning in the past year. In Japan, only 7% of respondents had calculated their retirement needs and potential income sources, whereas 46% of Canadians had done so.

What was surprising, Cevey says, was that Canadians seem to be more financially aware of issues relevant to retirement than almost anyone else. “But we tend to forget we have a very sophisticated financial system in Canada, and Canadians have gone through a pretty steep learning curve when it comes to financial planning,” he notes. They are also increasingly faced with having to make decisions about their own personal pension plans because of the growing percentage of defined contribution plans.

With 110 million customers in 77 countries, HSBC says it is “the world’s most international bank.” But its study found that “banks are not considered to be a valued resource for long-term financial preparation.” Cevey is quick to note that finding does not necessarily reflect the Canadian marketplace, in which the financial system is more developed. But, overall, the survey found people were two to three times more likely to talk to friends and read newspapers or magazines when planning for retirement as they were to seek professional advice. IE