Some eight million Canadians are rethinking their retirement timing because of the novel coronavirus pandemic, according to a new report.
And while nearly one in 10 pre-retirement adults are thinking of retiring early, one-third believe they will have to retire later, largely because of financial concerns, says the study, which was released by investment dealer Edward Jones in partnership with research company Age Wave.
“If many working adults were not adequately prepared for retirement, COVID-19 has thrown them even farther off course,” reads the report.
A whopping two million Canadians have stopped making regular contributions to their retirement savings, according to the study, which extrapolates the data from a survey of 1,500 Canadians and Canadian population data from the U.S. Census Bureau. The survey was conducted over a period stretching from early May to early June, before the Canadian job market staged a strong bounceback from record-breaking job losses at the start of the pandemic.
While 54 per cent of adults planning to retire felt confident in their ability to do so before the pandemic, just 39 per cent feel that way now, according to the survey.
Those who think they’ll have to postpone retirement cited needing more income, shrunken savings, investment losses and increased uncertainty about how much they’ll need in retirement.
The few who are considering anticipating retirement amid the pandemic, on the other hand, said they “realized that they were looking forward to retirement, or they want to spend time doing other things that are more important to them than work,” according to the report.
That realization may have come, in part, as a result of difficult family discussions about mortality, says David Gunn, country leader for Canada at Edward Jones. The pandemic prompted some two million Canadians to talk about wills, medical care and funeral wishes for the first time, the report found.
And those conversations may have prompted a rethinking among some Canadians close to retirement, Gunn says.
But those who can entertain such thoughts tend to be Canadians with so-called defined-benefit pension plans, says Alexandra Macqueen, a certified financial planner and co-author of the book Pensionize Your Nest Egg.
Defined-benefit plans are those that promise a certain level of lifetime retirement income based on factors such as salary history and length of employment. And the pandemic is driving a bigger wedge between Canada’s pension haves and have-nots, according to Macqueen.
Others, like teachers, may be opting to retire early instead of going back to work in conditions they believe are unsafe, she adds.
It helps that jobs that often have such pensions tend to be in the public sector, health care, the financial industry and other sectors that have been relatively spared by the massive job losses triggered by COVID-19, she adds.
“What I’m … thinking more and more is that the difference between people with pensions and without is getting so much more stark” Macqueen says.
The pandemic is also enhancing the divide between older and younger generations, with boomers (ages 56-74) and those from the silent generation (ages 75 and up) appearing to be less impacted by the health emergency compared to younger Canadians.
A whopping 30 per cent of millennials (ages 24 to 39) and 20 per cent of gen Z (ages 18 to 23) and gen X (ages 40 to 55) say they are not coping well with the effects of the pandemic, the survey shows. That compares with just 13 per cent of boomers and four per cent of those from the silent generation saying the same.
Similarly, around a third of gen Z and millennials say the pandemic has had a very or extremely negative impact on their financial security, with 22 per cent of gen X saying the same. By contrast, just 18 per cent of boomers and six per cent of Canadians 75 and over say they have been affected to that degree.
While COVID-19 is a bigger health threat for older Canadians, “most of the silent gen and many boomers are retirees who have fewer responsibilities around work and family, and have the benefits of Old Age Security and the Canada Pension Plan,” the report noted.
At the same time, the pandemic seems to be fostering older and younger generations coming together to help each other, the study suggests.
On the one hand, 1.8 million Canadians say they have provided financial support to adult children because of COVID-19.
On the other hand, 17 per cent of retirees and a whopping 30 per cent of those 75 and older say they are now relying more on their grown children due to the pandemic.
Help for family members across generations is going both ways, Gunn notes.
Sixty-one per cent of survey respondents say COVID-19 has brought them closer to family, and that, Gunn says, is a “silver lining” of the pandemic.
The survey was conducted online by Harris Poll using an online, representative poll from May 2 through June 4 among more than 9,000 adults age 18+ in Canada and the U.S., including 1,000 among the Canadian general population and 500 respondents from Toronto.