For many people, that’s probably what hitting retirement feels like. One minute they’re sailing smoothly along, a whole career in front of them. The next minute they’re standing at the precipice of their working years and there’s a “Happy Retirement” cake with their name on it. Just like Drumheller Valley, they don’t see it coming until they’re practically in it.
While retirement is a milestone most look forward to, the transition to the after-work stage of life can be an eyeopener, particularly for those who haven’t saved enough to maintain the lifestyle to which they’ve become accustomed.
And for many Canadians, the chasm between their retirement savings and lifestyle expectations could be extremely wide and equally deep. An analysis released last month by CIBC World Markets shows that Canadians aren’t saving enough. According to the report, the Canadian personal savings rate—in the negative to the tune of -0.5% for the second quarter of 2005—is at its lowest level since the 1920s.
And Canada isn’t the only country facing a savings dilemma. As you’ll read in Frontlines, Britons nearing the end of their careers are “panic saving” in droves. At the same time, a new poll shows that many people in Germany are opposed to a semimandatory retirement savings plan.
It’s a dangerous combination: a sense of complacency among the working population about how much they need to save for retirement, and a reluctance to have someone else look after it for them.
That’s the challenge facing Canadian pension plan sponsors: addressing widespread apathy about retirement savings. Too many Canadians think that, just because they’re part of an employer pension plan, they’ll be home-free once they hit 65.
Plan sponsors have a crucial role in dispelling this false sense of security— sounding the warning bell about how much retirement will cost, and to what extent the pension plan alone is going to meet those obligations. Many plan sponsors have already taken that role to heart, providing plan members with education about what it takes to retire comfortably and the steps required to reach that goal.
But if the latest numbers are any indication, there is still much work to be done. Otherwise, many plan members will find their drive into the sunset to be one bumpy ride.