Retirement reset: pandemic impacts retirement plans, timing and savings goals, RBC poll finds
Tuesday, August 31, 2021 10:22:00 AM
- Retirement dates delayed for some Canadians, as others lean into new opportunities.
- Retirement savings goal jumps to $1 million, with estimated shortfall of $300,000 or more.
- RBC's 'Second Act' video series highlights the value of having a plan. -
The pandemic has Canadians rethinking what their retirement could look like, when they will be able to retire, and how much they will now need to save to do so, according to not-yet-retired Canadians aged 50+ surveyed by the 2021 RBC Retirement Myths & Realities Poll.
The most immediate impact is that the pandemic has caused some Canadians to hit the pause button on their retirement date. Eighteen per cent of respondents say they'll now be retiring later than expected, with that response highest in Alberta (33%).
Concerns around outliving retirement savings have reached their highest level in a decade, as 21% of respondents with more than $100,000 in investable assets now expect to outlast their savings by 10 years (compared to 16% in 2010), with the highest percentage reported in Quebec (27%).
Compounding what respondents are facing over the near-term is the fact that half (50%) do not yet have a financial plan, and only 20% have created a formal plan with an advisor or financial planner.
"If you're nearing retirement without a formal plan, there's a shrinking window of opportunity to review your options, to see if you can enjoy the retirement lifestyle you're hoping for," explains Rick Lowes, Vice-President Strategy, RBC. "An advisor can help you translate your personal goals into financial ones and explore strategies to achieve them. Also, RBC's MyAdvisor gives our clients the ability to use interactive scenario planning, to see the potential impact of today's financial decisions on tomorrow's projected outcomes."
Poll respondents also indicated the pandemic has prompted them to either think about, or take action on, a number of retirement-related issues, including:
- Thinking more about where they will live in retirement (22%)
- Deciding where they do not want to live (20% do not want to live in a retirement home)
- Reviewing and updating wills and beneficiaries (15%)
- Taking stock of their financial affairs (17%)
- Taking up a new career or hobby, realizing 'life is short' (16%)
Canadians approaching retirement have also been resetting their retirement savings goals. Those with more than $100,000 in investable assets now estimate they will need to save $1 million on average – approximately $50,000 more than in 2019 – with over three-quarters falling short of their goal by almost $300,000 on average. Meanwhile, those with less than $100,000 in investable assets have lowered their retirement savings goal – now sitting at $533,153 (vs. $574,354 in 2019) – but they have a much larger savings gap of $472,991.
To help bridge a shortfall during retirement, both of these groups responded that they would:
- Stay in their current home and live more frugally (37% of those with >$100K; 36% of those with <$100K)
- Return to paid work (31% and 36% respectively)
- Downsize/move (31% and 23% respectively)
- Ask a family member for assistance (lowest on their list of options, at 3% and 5% respectively)
"We know from past polls that retirees will find a way to make their finances work, but this may mean they aren't leading the lives they were hoping for when they retire," notes Lowes. "We're here to help Canadians so they can focus on what truly matters to them."
Being able to find and follow a passion as a retiree is the focus of RBC's new Second Act video series, which highlights what can be accomplished beyond a first career, particularly if a retiree has a plan. For those who may feel their retirement dreams are out of reach, the series has a key piece of advice: Don't give up on what you really want to do in retirement.
More information about the comprehensive resources RBC provides to support Canadians as they transition into and live in retirement is available in Retirement Planning.
SOURCE: RBC Royal Bank