Working till 66 is no tragedy

Senior man working on a computerBy Jonathan Chevreau

Earlier this week there was extensive mass media coverage of the latest Sun Life “Unretirement” survey, which found more Canadians now expect to work full-time at age 66 than the number who are retired.

Given that the traditional retirement age has been 65, and remains the age many older investors think of collecting Old Age Security and the Canada Pension Plan, the general tone of this coverage was that the idea of working to such an “advanced” age is in itself scandalous.

Regular readers of the Hub will know what I’m about to say, and did say Wednesday night on a CTV item on the survey, which you can find here at Findependence.TV’s Video Hub. With rising trends to longevity, more and more people are choosing to work longer or feel financially compelled to do so. Indeed, governments around the world generally would love to see us all work longer and pay taxes longer, which is why the age of OAS onset is being bumped up to 67 for younger Canadians.

Plan for Longevity, not Retirement

I still love the positioning of Mark Venning at, who says we should be planning not for Retirement, but for Longevity.

To recap the Sun findings, it has found that since it started the survey in 2008, the gap between the percentage who expects to be retired and fully employed at 66 has been closing steadily. So back in 2008, most (51%) working Canadians expected to be retired at 66, versus only 16% who expected to be working full-time at 66.

As the financial crisis hit the percentage who were confident about being retired at 66 plunged from a high of 55% in 2009 to a low of 27% by 2012. Meanwhile, those expecting to still be working full-time rose from 16% to the same 27% in 2013. That crossover point became the focus of the media’s news angle on Wednesday, stoked in part by Sun’s backgrounder:

This year, for the first time in our seven-year study, more Canadians expect to be working full-time at age 66 than expect to be fully retired (32% expect to be working full-time at 66; 27% expect to be retired.)

That makes for a controversial sound bite but note that another 27% said they will be working part-time at 66, another 12% weren’t sure and 1% believe they will be “no longer living.” That’s a euphemism for “dead” of course, but you’d expect such a phrase from a life insurance company. (Life insurance is really Death insurance but no doubt focus groups influence lifecos to shy away from such stark terms.)

Need to work vs Want to work

But we digress. The really interesting part of the Sun Life survey is the bit about why people are choosing to keep working at 66. Most fall into one of two camps: 41% say they’ll still be working at 66 because they want to (i.e. choose to), while 59% figure that financially speaking they have no choice. This dichotomy I highlight in Findependence Day, where the financial planning character Theo explains to his young proteges that he continues to work because he wants to, not because he has to. From page 51 of the original edition:

I didn’t have to work for the man any more …. The day after achieving Financial Independence you may be doing exactly the same thing you were doing the day before. The difference is you’re doing the work because you want to do it, not because you  perceive you must.

Back in 2009, the want to/need to ratio was fairly close: 53% needed the money while 47% were still working at 66 because they enjoyed it, felt stimulated, etc. The gap steadily widened until 2013, when the “Need to” crowd hit 65% surveyed, versus only 35% that chose to. Obviously, the period 2009 to 2013 would have been influenced by the ongoing financial crisis and accompanying recession: the more pessimistic people are about markets, the more they’re inclined to hang on to their jobs. Only in the past year has this reversed itself, with 59% in the “have to” group in 2014, versus 41% in the “choose to” camp.

When I’m 64

On average, Canadians told Sun Life they expect to retire at 64, which of course is the magical “Will you still need me, will you still feed me” line from the Beatle’s song.  Sun Life says 64 is the lowest figure it’s seen since 2009 and well below last year’s 66 and the high of 69 recorded in 2011 (Talk about pessimistic!).

But Sun Life says the trend to working past 65 is “offset somewhat” by those expecting early retirement: 11% plan to retire before 60, 27% between 60 and 65, and 24% plan to wait until after age 65. Call me a cynic, but my bet is the vast majority of the “before 60” crowd are government employees in inflation-indexed Defined Benefit plans that most people in the private sector lack. That’s a topic for another day!

Average nest egg now more than half a million

Those without gold-plated pensions will have to rely on their RRSPs, but the survey found the amount of retirement savings all-told (including TFSAs and non-registered) jumped from $417,870 in 2013 to $556,495 in 2014. I note with interest that that’s about the same level as the magic $500,000 that Wes Moss says “happy retirees” need to accumulate, in his book You Can Retire Sooner Than You Think. For more on that, see my MoneySense blog from last summer.

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