When Jeannette Gallant and Stephen Rautenbach sat down last fall with their financial adviser, the Vancouver couple asked the question that looms large for baby boomers like them: Will there be enough money for retirement?
Ms. Gallant, 56, a part-time manager of a non-profit sports club and bar, has no company pension but her husband, 53, an electronic security systems design consultant, participates in one at work. Committed savers and married for the past seven years, the couple chose to rent, not buy, in Vancouver's hot housing market.
In meeting with their long-time adviser, Mr. Rautenbach says, "we asked direct questions about where we would be at 60 and 65 and we were happy with what we heard." Ms. Gallant agrees. "We feel cautiously confident that what we are doing is going to work out – if the markets keep co-operating."
Not every baby boomer feels as secure as this couple.
In a 2014 study on retirement readiness, the Conference Board of Canada found most Canadians are saving but that six in 10 survey respondents said they have not put aside enough for their senior years. Notably, those aged 55 through 64 admitted to not saving adequately, raising doubts about their making ends meet in later years.
"Employers, Canadians themselves and public policy makers need to get focused on encouraging people to take this matter [retirement preparedness] seriously," says study author and project director Judith MacBride-King. "There is much more that can be done."
Hers is a widely-shared refrain, in part because baby boomers face circumstances different than previous generations. Increased longevity, for example, means retirement could last longer than working life.
In 2011, life expectancy at birth in Canada was 81.7 years, according to Statistics Canada, up 24.6 years since 1921, while the agency reports those aged 65 can expect to live another 20.2 years on average.
"Someone changed the rules in our lifetime, says Nora Spinks, chief executive officer of the Vanier Institute of the Family, noting today's boomers turn 65 at the rate of one in seven seconds in North America. "It means we have to make sure our health span and life span is in sync and that our bank account is strong enough to carry us to that point."
She and financial industry spokesmen warn that those near retirement (63 years on average for Canadians last year) know too little about what they need to support themselves as seniors.
The disappearance of defined-benefit pensions that guarantee a predictable monthly sum, for example, means employees need to understand the financial implications of group RSPs and defined-contribution pensions based on the value of assets and the level of interest rates at retirement.
"We find the level of understanding appallingly low," says Fred Vettese, chief actuary at Morneau Shepell, human resources consultants. With a growing proportion of seniors carrying debt into retirement – a no-no in his book – the loss of above-inflation returns from government bonds adds to stress.
"The biggest concern looming now is low interest rates and low returns," he says.
Financial planners share Mr. Vettese's call for pre-retirees to understand their retirement options.
"There is general confusion among consumers and clients who haven't had a real financial planning discussion," says Jason Abbott, president of Wealthdesigns, a Toronto financial advisory firm. "The concern now is, 'Am I going to outlive my capital?'"
Vancouver-based Robert Fleischacker, president of Stonehaven Financial Group, says that even with adequate financial resources, retirees often fail to define the "end game" of life after work.
"The question we get most is: 'Am I doing the right thing with my investment?'" he says. The relevant question, he adds, is: 'Where do you want to be, by when, and what are you doing now to get you there?"
Rob Eby, executive financial consultant at Investors Group in Winnipeg, says baby boomers made work their life. "They do know how to save … but they don't have a concept of how to spend money in retirement," he says. Defining an affordable retirement lifestyle, he adds, "can be somewhat of a bigger anxiety than the money."
Other uncertainties add to the stress, says Terry Zavitz, president of Zavitz Insurance Inc., a London, Ont., financial planner for the past 32 years.
"It is so much more complex today than years ago," she says, citing new retirement products, tax rule changes and a generational squeeze on baby boomers with aging parents and indebted adult children.
Even conscientious savers, she adds, seek assurances about factors beyond their control such as unexpected health problems and long-term care costs.
Surprisingly, spouses fail to talk to each other about retirement. A 2014 "retirement myths and realities" poll by Royal Bank of Canada found 68 per cent of pre-retiree Canadians aged 50 and older have not raised the topic with their spouses.
"It's amazing to see how the two sitting together might have different things they value as top three priorities" says Richa Hingorani, senior manager of financial planning support at RBC. "It is very important for the two [spouses] to be doing the planning together."
Saskatoon residents Lauren and Michael Martin, now in their 50s, make a point of discussing retirement aspirations, including an annual review to monitor progress toward retirement.
"We started talking to each other two years ago about retirement and what it would look like," says Ms. Martin, a vocational rehabilitation consultant.
Close to paying off their house, the couple met recently with their financial adviser, Dean Owen, a partner at Cherry Financial Services Inc.
"Truthfully, I was surprised when Dean said you are doing very well," says Mr. Martin, a visual artist and teacher, 58, who expects to "pull back" at some point in the next few years.
Those anxious about retirement need to start the sometimes-difficult conversation about future income, expenses and lifestyle goals, financial planners say.
"Taking control, developing a plan and creating a strategy to execute the plan is what alleviates the fear," says Adam Keogh, president of Greendoor Financial Inc., of Windsor, Ont. "Having a plan and showing where we are currently, and with projections, makes people more comfortable."
For those without a plan, there is still time, says Ron Harvey, senior financial adviser and branch manager of the Ottawa branch of Investment Planning Counsel.
"I often hear, 'If I haven't done it now, it is probably too late,'" he says. "It can't be too late. You can plan today so you have a sense of what you can and can't do in retirement."
Doubts and insecurities
A comprehensive report last year on retirement perspectives of employers and individuals by the Conference Board of Canada revealed that Canadians have doubts and uncertainty about life after work. Among the findings:
- One-third of working Canadians surveyed do not know when they will retire completely from the labour force. Those who do know expect to retire by age 63. Almost one in five (19 per cent) say they will never retire.
- Only 40 per cent of those surveyed view retirement planning as a priority, with women, younger Canadians and those with lower levels of household income particularly at risk of not preparing for their senior years.
- Almost one-third of those surveyed ( 31.9 per cent) have put off their retirement date in the past five years, citing affordability concerns.
- Among those 65 and older, debt loads rose 6.5 per cent between the second quarter of 2012 and 2013, the largest growth compared to other cohorts.