Working in retirement: The new normal?

For baby boomers on the cusp of retirement, they could find that meetings and marketing plans will need to be just as much part of their daily lives post-retirement as they will pre-retirement.

A new CIBC poll of Canadian baby boomers ages 50 to 59 shows that while many are eligible to retire within the next decade, more than half say they will need to supplement their retirement income by continuing to work.

Key findings of the poll

  • On average, Canadians in their 50s plan to retire at age 63, but 53% say they’ll keep working in retirement, with most planning to work part-time;
  • 61% say they have fallen short of the savings they expected to have in their 50s; and
  • 45% say they have less than $100,000 put away to fund their retirement.

How much have they saved?
Many boomers in the survey felt they had come up short of what they expected to have saved by this stage in their lives, with 45% having saved less than $100,000.

“That [statistic] blows my mind,” says Tony Ioanna, associate partner with Aon Hewitt. “Where have you been for the past 20 years?” But, he adds that financial literacy wasn’t a front-burner issue until the last five years, so it’s not entirely their fault. “Nobody’s been there to help [employees] out.”

The survey found that 15% of Canadians in their 50s have saved less than $10,000 for retirement, 15% have saved $10,000 to $49,000 and another 15% have saved $50,000 to $99,000. Thirteen percent have saved $100,000 to $199,999. Only 6% have saved $500,000 to $999,000. Two percent have saved more than a million dollars.

What do you need?
Your retirement nest egg doesn’t necessarily need to be the much-advertised 70% of your working income to live comfortably in retirement, as long as you have realistic expectations.

The working trend
“Working in retirement is fine, if you want to be there,” says Ioanna. “If you are working in retirement because you have to—not because you want to—you will be miserable.”

The upside for those who plan to continue working in retirement is that they may be able to leave their savings untouched for a number of years, using the income from their employment to replace what they would normally draw from their retirement savings—which could protect their retirement pot from some longevity risk.

“Even though you may have fallen short of where you had planned to be in terms of your savings, the years just before retirement can be some of the best years to further your savings and put money away for the future,” says Christina Kramer, executive vice-president of retail distribution and channel strategy for CIBC. “Take advantage of the opportunity to add whatever you can to your savings, even if your planned retirement from full-time work is only a few years away.”

Tips for retirement planning
Get help – “Get someone to show you the right way,” says Ioanna. It doesn’t necessarily need to be a financial advisor but someone with professional experience who will keep your best interests in mind.

Keep saving – Once you have paid off your mortgage or other debt obligations, cash flow will improve significantly. Some of your best saving years can be in your late 50s and into your 60s, so there is still time to ramp up your savings and put more money away before retirement.

Be realistic – Set a realistic retirement age and savings goal, and revisit that plan every three years, suggests Ioanna.