Half of those who returned to work cite finances as main reason
TORONTO, Jan. 14, 2014 /PRNewswire/ - A new survey by ING DIRECT reveals that retirement has been cut short for 30% of older Canadians* with close to half (48%) being forced back to work due to financial reasons**. A related survey from ING DIRECT found that the bulk of previously retired Canadians who re-entered the workforce for financial reasons did so because they did not have enough money saved for retirement (33%) or they faced increased living costs (31%). Of the half who were forced back to work for financial reasons, nearly a third (31%) returned on a full-time basis.
For many once retired Canadians, the reality of life after work isn't what they imagined 20 or 30 years ago. Forty-five per cent said the cost of living was higher than anticipated, and 27% said it was more of a financial struggle than originally thought. If given the opportunity to re-visit their 20s and 30s, Canadians who re-entered the workforce said they would have found a way to save more for retirement (29%), they would have started saving earlier (24%) or they wouldn't have spent money so mindlessly (11%) .
"The reality of retirement for many Canadians is a sobering reminder that you can't put your financial future on the back burner. Among the many other financial priorities we face during our prime working years, we need to make sure that retirement planning doesn't get overlooked," said Peter Aceto, president and CEO at ING DIRECT.
Aceto added that "motivation to save, saving regularly and starting early are key to helping Canadians develop a life-long habit of saving that will better prepare them for retirement. The good news is that for most Canadians, it's not too late to start adopting these positive saving habits."
What would have motivated these boomer generation Canadians (who went back to work) to have maxed out their RSPs at a younger age? The survey found that 40% would have maxed out their annual contribution if they had a better understanding of how much was needed to retire, while 16% felt they would have benefited from a good financial role model. Interestingly, 20% confessed that nothing would have motivated them.
For those having to work through their golden years due to financial reasons, 58% believe that they'll be able to retire in five years, but one quarter (24%) of respondents are still only hopeful.
The boomer generation of once retired Canadians has some advice for Millennials beginning their savings journey: 42% said to start saving as early as possible, 21% said to take control of your personal finances, 18% said to learn how to budget, and 12% suggested saving more and spending less.
Are Millennials preparing for retirement?
In a separate, related ING DIRECT survey***, the majority (64%) of working Millennials aged 18-34 are contributing regularly to their retirement savings, but 69% are not maxing out their annual contribution. In fact, 61% of younger Canadians said they have no idea about how much they will need to save for retirement.
When asked about their motivation to save for retirement, 29% of Millennials surveyed said good money habits passed on by parents would inspire them to save. Having a financial plan and sticking to it (22%) and knowing a family member or friend who is struggling in retirement/hasn't been able to retire (18%) were also cited as reasons to feel encouraged to save for the future.
Most Millennials surveyed think retirement will come after age 60: 29% think they'll retire between 61 and 65 years old, while 21% said they are likely to retire between 66 and 70 years old.
These younger working Canadians are confident, however, that they will retire when expected because they intend to avoid debt by saving more than they spend (41%), by having a financial plan and sticking to it (37%), or by knowing how much they'll need to retire (20%).
Unfortunately, a significant number of these working Millennials (29%) are not confident they will retire when they want.
To learn more about retirement savings options like RSPs and TFSAs, visit ingdirect.ca/retireonce.
Tune into a live Twitter chat with @SuperStarSaver about RSPs and TFSAs by following the hashtag #OrangeChat on January 23, 2014 from 12 - 1pm EST.
About the Surveys
*Between December 4, 2013 and January 6, 2014 an online survey was conducted with 1,077 randomly selected Canadian adults 55+ who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.0%, 19 times out of 20. The results have been statistically weighted according to education, gender and region (and in Quebec language) Census data to ensure a sample representative of the 55+ population of Canada. Discrepancies in or between totals are due to rounding.
** From December 16, 2013 to December 18, 2013 an online survey was conducted among 1,001 randomly selected Canadian adults aged 55+ who have retired and re-entered the workforce and who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to region and gender Census data. Discrepancies in or between totals are due to rounding.
***From December 16, 2013 to December 18, 2013 an online survey was conducted among 1,008 randomly selected Canadian adults aged 18-34 who work full or part time and who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to region and gender Census data. Discrepancies in or between totals are due to rounding.
About ING DIRECT
ING Bank of Canada, operating under the trade name of ING DIRECT, is a wholly owned subsidiary of The Bank of Nova Scotia. ING DIRECT is Canada's leading direct bank with over 1.9 million Clients and close to $40 billion in total assets. ING DIRECT is a bright way forward in everyday banking for Canadians, offering value added, simple products such as high interest savings accounts, including TFSAs, GICs and RSPs with no fees or service charges, mutual funds, low rates on mortgages and a no-fee, daily chequing account that actually pays interest. ING DIRECT has been operating in Canada since 1997, and has paid over $6 billion in interest to Clients. ING DIRECT is open for banking 24 hours a day, 7 days a week, at ingdirect.ca, on mobile devices at m.ingdirect.ca or by calling 1-800 ING DIRECT (1-800-464-3473).
ING Bank of Canada and its subsidiaries have been acquired by The Bank of Nova Scotia and are no longer affiliated with ING Groep N.V. The trademarks ING, ING DIRECT, ING Lion, the ING Lion logo and any derivation, variation, translation or adaptation thereof are trademarks of ING Groep N.V. and are used under license.
SOURCE ING DIRECT