Canadians approaching retirement are now the fastest-growing demographic in the country, Statistics Canada reports. The number of Canadians aged 55 to 64 — those most likely to be thinking seriously about retirement — jumped by 28% in the past five years to 3.7 million. In less than 10 years, one in five people in the workforce will be aged 55 to 64, StatsCan predicts.

The sharp increase can be attributed to Canada’s aging baby boomers, who now account for roughly one-third of the population.

Demographers suggest that boomers will continue working longer. Responsibilities such as paying for college will extend to much older age groups, and they’ll struggle to match their current lifestyle in retirement. And as many of them have opted for non-traditional relationships, those who never married or had children may not be able to rely on family for support to the same degree as their predecessors.

All of which should make saving for retirement a key focus for this group, says professor Sharon DeVaney of Purdue University in Indiana, in her paper, Comparing the Retirement Savings of the Baby Boomers and Other Cohorts.

DeVaney wanted to see if the life-cycle savings hypothesis — which assumes that a household attempts to maintain a consistent level of consumption in the lifetime of its members — is sustained through various generations. This hypothesis holds that many people borrow when they’re younger and their earnings are lower, then save in anticipation of retirement when they are in midlife and their earnings are higher, and most households reduce their savings during retirement.

DeVaney’s study examined the retirement savings behaviour of baby boomers compared with that of other age cohorts. The results showed that while each succeeding cohort was more likely than the previous cohort to pay closer attention to retirement savings, their level of success varied.

Generations X and Y (born from 1965 to 1987) were least likely to hold a retirement account, while the “swing” cohort (1928 to 1945) was most likely to hold a retirement account. However, there was no statistical difference between the younger (1955 to 1964) and older (1946 to 1954) boomers and the swing cohort when it came to holding a retirement account, she reports.

The amount of retirement savings, however, was significantly different among the cohorts. Younger boomers and Gen X and Y had much smaller amounts saved for retirement than the older boomers, while the swing cohort had more saved than the older boomers. But this was only $14,000 more, on average, than the amount that older boomers had set aside. Households in the older boomer cohort had twice as much in their retirement accounts, on average, than the younger boomers.

DeVaney found that obtaining more education, being more willing to accept risk and beginning an early savings regimen were among the factors that were most influential in having greater retirement savings. Income was only marginally significant in predicting retirement savings behaviour, although it did contribute to the total amount saved.

Although boomers have clearly invested for retirement, the majority have just not saved enough, according various studies conducted by the AARP, formerly the American Association of Retired Persons.

Unlike boomers’ parents, who were likely to stay with one company and draw a sizable pension, many boomers have job-hopped, either to find work that might make them happier or, often, because of mergers, layoffs and outsourcing.

As a result, only 11% of boomers are planning to stop working entirely when they reach retirement age, AARP reports. Most hope to cycle between periods of work and leisure, thus creating a new model of “fluid retirement.”

But will this be enough to ensure that they have the money to do what they want? In a study entitled Who is Ready for Retirement, How Ready, and How Can We Know?, AARP economist Sophie Korczyk noted that while the majority of boomers expect to work — at least, part-time — after they retire, relatively few expect to scale back their lifestyle during retirement. Older workers counting on “bridge” jobs to fill the gap between career work and full retirement are probably overestimating their potential impact, she warns. Such jobs — part-time work, in particular — are often poorly paid, with few benefits and little security, she says, predicting that at least some boomers will come up short as a result. IE