Are you prepared to retire?
According to a February story in the Toronto Sun, the number of Canadians who feel that they need to keep working to earn basic living expenses has increased from 11 per cent in 2008 to 20 per cent in 2013, and only 28 per cent of Canadians expect to be able to retire by age 66, compared to the 51 per cent who expected the same thing in 2008. This is not a financially optimistic trend.
The government suggests holding off until some time after the age of 65 to claim the CPP pension, speaking to the increasing value of that pension benefit after the age of 65 and upwards to the age of 70.
Recently, the government made a change to the eligibility age of the Old Age Pension. Previously, those turning the age of 65 were eligible to apply for this pension; however, with this recent change, those born after March 31, 1958, do not qualify for this pension until they reach the age of 67. This may be linked to the increase in Canadian life expectancy which now stands at 81.1 years, up from 71 years in 1961, as reported by Statistics Canada. Additionally, we can expect, on average, to live 90 per cent of those years in relatively good health.
The Old Age Pension is available to all Canadians who reach the requisite age, as is the CPP for those who have contributed through their wages to this national pension plan. For many people, these two pensions will be all they’ll have to live on once they retire. I have read in a number of sources that two thirds of Canadians do not have defined pension plan benefits for their retirements. The challenge for most of us will be to find a way to cut our living expenses so that we can live within our means upon our retirements. It won’t be easy.
Of course retirement is not all just about the money. People choose to either retire or not to retire for a lot of very good reasons. In some cases, people enjoy their work as well as their daily interactions with those with whom they work and/or associate. Many people believe that the expectation of retirement by the age of 65 is arbitrary; after all, 65 is just a number. Other people have nothing to retire to, so they intend to keep working in order to have something to do.
Men, more so than women, tend to attach a significant amount of their self-worth to their jobs. For these men, retiring from their jobs means they are giving up a major portion of who they are. For this group, retirement, unless prompted by sudden failing health, is almost unthinkable. They will just simply work until they can work no longer. Those in this category who bend to a diminishing cultural expectation of retirement at 65, frequently do not fare well. With the loss of co-workers and significant work to perform that is engendered by retirement, many of these folks lapse into despondency and/or despair after they retire.
On the other hand, many people cannot wait for retirement. They may dislike their jobs or the people they work with, or a combination of the two, or they might just be sick of struggling in the work-a-day world, and seek to withdraw to a place that provides them with more comfort and more support. Other folks have significant health issues and are just trying to hang in there until they reach the age of 60, the minimum age at which you qualify to apply for the CPP.
I know people who are on the Freedom 55 plan, and who cannot wait for that age to arrive. I’ve asked them what they plan to do, after this magical date arrives, and most of them respond that they have no real plans. While on the one hand, I kind of envy them, on the other hand, I feel sorry for them.
It would be nice to leave work at age 55 while most of us still enjoy good health; the notion is appealing, but then reality intrudes. All those household jobs you said you would do somehow still do not get done after you retire. Chances are that you explained to your spouse that your work kept you too busy to attend to that honey-do list, and that you would get to it when you retired. The problem is that now you have retired, you still aren’t getting to those jobs.
I have spoken to a number of retirees who report even though they are no longer working for pay, they are busier than ever. It could be they are helping family and neighbours with various projects, volunteering for organizations close to their hearts, engaging in leisure activities in their communities, or traveling to places they’ve not seen before.
I passed the 55 milestone some time ago without the ability or the desire to retire. Like many Canadians, I’ve always worked and I cannot imagine not working. I am fortunate to have enjoyed excellent health up to this point in my life, and I pray that I may continue to do so for many more years to come (knock on wood).
In the end, preparation for retirement will likely be in equal portions financial and mental, and there is no time like the present to begin the process.
Retirement for Rob MacLellan is still in the distant future. He can be reached by phone at 673-3269, or by e-mail at email@example.com