Cost of living, interest rates, and inflation are adding financial pressure on many older Canadians, making it hard to save for retirement - report
Employer-sponsored benefit plans that focus on employee financial and physical health and well-being may prove beneficial to employees even after they have retired. A new report shows that physical and financial health are key for older Canadians to prevent the need for care and allow them to excel in the three key dimensions of ageing well – social well-being, financial security, and health and independence. The report shows that the current system isn’t in a position to assist those that may need help as the number of retired Canadians increases.
While some population groups report more favourably across dimensions of ageing well, those in poor health and with lower incomes were found to be among the most vulnerable. The National Institute on Ageing (NIA) report, in partnership with the Environics Institute for Survey Research, shows that when analyzing health and independence, those who are in poor health and struggling financially consistently have the greatest need for care. These same individuals also have the worst access to both health care and home care services and express the least confidence in being able to access support in the future, whether it be health care or home care services.
The report says that as more people retire going forward, the system just isn’t prepared to support them all as they head into their golden years.
“Canada, like many western countries, is experiencing significant population aging and in 10 years or less, about one quarter of our population will be 65 years or older. Supporting the rapidly growing number of older Canadians will increasingly require new policies and programs because our current systems aren't adequately set up to address the unique health, social, and financial needs of older adults,” says Natalie Iciaszczyk, research program manager at the NIA and co-author of the 2023 NIA Ageing in Canada Survey.
One quarter of Canadians are struggling financially in retirement
The survey explored the perceived ability of Canadians 50 and older to financially support themselves later in life with indicators of financial well-being, retirement readiness, and future financial concerns. Against the backdrop of the current economic climate, one in four Canadians say their income is not enough for them or that they are having a hard time financially.
“We know that with population aging and improvements in life expectancy, Canadians will increasingly be spending longer periods of time in older age than ever before,” says Iciaszczyk. “And ensuring that older Canadians can age well and live out these longer periods of life later on requires them to adequately save for retirement and have the financial resources needed to support themselves, maintain their pre-retirement standard of living, and cover the cost of possible care that is often needed later in life.
“But the last few years have also put a lot of additional financial pressure on many Canadians due to factors such as inflation which have increased the cost of living and made it even harder for many to make ends meet, let alone save for the future.”
The report finds that of Canadians 50 and older who are still working, only 35 percent feel that they can afford to retire when they want, while two-thirds say they are either not in a position to afford to retire or they are unsure.
Concerns about affording retirement
The concerns when it comes to affording to retire include:
- The rising cost of living (70 percent);
- Running out of money (46 percent);
- A reduction in either CPP or QP or other government benefits (37 percent);
- Not being able to afford major medical or long-term care expenses (32 percent);
- Not having family or friends to help take care of me as I get older (26 percent);
- Costly home repairs or renovations (23 percent);
- Not being able to help other family members who may need financial help (21 percent);
- Not being able to leave money to family members or others when I die (17 percent); and
- A major real estate or stock market crisis (12 percent).
“Interestingly, our survey found that the types of issues that bring Canadians the greatest amount of concern stay the same across age cohorts,” says Iciaszczyk. “But despite sharing concerns about the same types of issues, we also found that the oldest Canadians were consistently the least worried and that fewer of them reported feeling concerned about each of the financial issues covered in our survey.”
The report shows that in order to meet the unique and evolving care needs of older Canadians, again more resources and targeted efforts are required to adequately support persons in worse health and with lower incomes to support Canada's ageing population.
It offers plan sponsors and members some more perspectives of the benefits and importance of adequate savings for retirement, good health and well-being; and a focus on financial education.
For more information, visit the NIA.
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