Traditional ideas of retirement are changing and as a result few Canadians are sure about how much they need to save, according to a recently released poll by Toronto-based Royal Bank of Canada.
According to the 23rd annual RBC RRSP poll, only one-in-four Canadians, who have yet to retire, know how much money they require for a comfortable retirement. Even retired Canadians remain unsure, according to the survey results, as only 46% are confident about how much their retirement will cost.
That people’s retirement savings goals are a bit of a moving target is unsurprising for Jason Round, head, financial planning support, RBC Financial Planning in Toronto, because retirement itself is transforming.
“When that definition of retirement changes and people start to think it’s not necessarily about completely stopping work,” he says,” “it’s also going to change the needs that you have going into retirement.”
As the definition of retirement shifts, how advisors talk with clients about their future plans also needs an update. “Advisors are paying a lot of attention to the concept of averages of what people think they’re going to need in retirement,” says Round. “Those advisors are, frankly, starting out in the wrong spot.”
Instead, for a conversation that resonates with clients, says Round, advisors need to talk about what retirement means for clients and what it is that they want to achieve personally.
According to the RBC poll, four important factors that Canadians need to think about in regards to their retirement include: longevity, health, inflation and work. Longevity in particular, says Round, is a point that advisors need to raise when discussing retirement because as life expectancy increases clients may need to reconsider the age at which they retire.
“When 65 was sort of landed on as the typical retirement age in Canada, it was a long time ago,” says Round. “Advisors have a role in helping Canadians understand the implications that [longevity] has and the idea that maybe 65 isn’t the right retirement age for someone because they’re going to live for such a long time.”
The RBC poll was conducted by Ipsos Reid between Oct. 24 and Nov. 27, 2012 through a survey of 1,225 Canadian adults.