Most nearing retirement will need to make ‘significant’ lifestyle cuts: report
Global News
More than half of Canadians nearing retirement age will likely have to make sacrifices to their personal lifestyles as they exit the workforce, a Deloitte Canada report finds.
A wave of Canadians gearing up for retirement will be forced to make “significant” cuts to live comfortably for the rest of their lives, an analysis from Deloitte Canada shows.
The report released Wednesday looked at the finances of 4,000 Canadidans between 55 and 64 years old to gauge their “retirement readiness.”
Hwan Kim, a partner at Deloitte Canada, notes this group is particularly large right now with three million Canadians in the baby boomer generation primed to retire in the next decade.
“What we found was quite staggering,” he says of the analysis.
Deloitte Canada found that only 14 per cent of near-retirees are expected to be comfortable in retirement, able to absorb unexpected costs without much stress. These individuals largely have $900,000 or more in financial assets and likely own their own home on top of that, according to the report.
In the bottom percentile are the nearly one million households who are expected to rely mainly on public support such as the Canada Pension Plan in their retirement years. While Deloitte noted that public investments in CPP and other supports have been improving in recent years, being on a fixed income means this group will be “particularly vulnerable” to unexpected costs after retirement.
In the middle are the 55 per cent of near-retirees who will have to make changes to their lifestyles to avoid outliving their financial savings. This cohort is largely made up of middle-income Canadians, including those who may or may not own their home outright.
It’s this group that Kim says has been traditionally ignored by the private and public sector, and to whom more attention will have to be paid to fill in the “readiness gap” — a burden that could make retirement more difficult and see financial stress passed onto future generations.
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