A third of employees don’t expect to ever reach full retirement, according to a new survey by Aon.
The survey, which polled 1,000 Canadians at all stages of their careers, found more employees are postponing retirement due to financial concerns.
The majority of participants said they don’t expect to fully retire all at once, with only 34 per cent of respondents saying they plan to do so and 36 per cent indicating they expect to work part time before fully retiring. If these trends continue, late retirees could cause a multitude of problems for the workforce, noted Aon, such as reduced career advancement opportunities for mid-level workers and higher benefits costs for older employees.
Only two out of every five respondents said they’ve set a goal for how much they need before fully retiring. More than half (51 per cent) admitted to being worried about running out of money during their retirement.
In addition, 64 per cent of respondents said they’ll rely on their employer’s retirement plan to be their main source of income and 71 per cent claimed they can’t afford to save more money. However, more than a fifth (22 per cent) of respondents said they don’t know how much their employer currently contributes to their savings plan, while 17 per cent said they aren’t aware of how much they’re contributing either. Aon noted this is a sign employers need to engage more with employees to ensure they’re being provided with the necessary retirement readiness information.
The survey also asked employees what information they wanted to know about their current retirement savings. Nearly two-thirds (62 per cent) said they want help understanding the level of income they’d receive from their current savings in their plan. Only 34 per cent said they use employer-provided tools and resources to set their retirement savings goal, while 64 per cent said they use professional services. Almost half (49 per cent) of employees indicated they want their employers to provide broader financial services and products.
“The good news is that the employees in our survey identified saving for retirement as a top priority and participation rates in workplace retirement plans are high, but we also found that workers are having real challenges being able to afford to save more,” said Rosalind Gilbert, an associate partner of Aon, in a press release. “An even more fundamental issue, however, is the lack of planning and knowledge around retirement savings and income, which is a big call to action for employers, who need to do more to educate members, provide access to financial services and equip them with holistic strategies for retirement readiness.”
The survey also found 50 per cent of employees said they need a minimum of 25 per cent of their salary in addition to government pensions to replace their income in retirement, yet only 39 per cent said they expect to receive this and 30 per cent said they don’t know how much retirement income they should expect to receive.