What to expect in retirement - 2015 Retirement Survey Results

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Fidelity Investments recently published their findings from two separate surveys and the results might surprise you. One was focused on achieving retirement fulfillment and the other was on what couples thought about retirement. With each study, about 1400 individuals were surveyed with about half over 45 years old and half under 45. Here are the key findings:                         

1) Couples think they communicate well but research says otherwise.Despite over 70% of couples saying they communicate exceptionally or very well, over 40% could not accurately say how much their partner made. Over 10% were wrong by $25,000 or more. About 36% disagreed on how much they had invested and almost half (48%) had no idea how much they needed to save to maintain their current lifestyle in retirement.  

2) Many couples don’t know what they need or have saved for retirement.Nearly half (48%) “have no idea” how much they need to save to maintain their current lifestyle in retirement. Another 47% are in disagreement about what the need. When asked to estimate the Canada Pension Plan and Old Age Security payments they would receive in retirement, 60% of couples didn’t know or were unsure. Disturbingly, 49% of the Boomers (50+) who participated in the survey didn’t know. Half of the couples couldn’t agree on their planned retirement age. 

3) Common concerns for retirement.When asked what their top financial concerns are in retirement, 51% said outliving their retirement savings and 37% were concerned social benefits (ie. CPP/OAS/health benefits) being reduced. Only 21% of couples - this was consistent across all age groups - had developed a retirement plan to address these concerns.

4) Advice for newlyweds. . Save as early as possible for retirement at 57% was the clear winner.

5)Funding Retirement Income.The survey didn’t permit “lottery win” for an answer but 22% expect an inheritance to help fund their retirement. Be careful with how long you think you have to save for retirement - 48% retired sooner than expected due to illness or job elimination.  

6) a) Other Commitments in Retirement - Family.  Almost 10% of retirees said they were or they expected to financially support an elderly parent during their retirement. Over 25% said they had or were supporting at least one adult child after retiring.

    b) Other Commitments in Retirement - Debt.Almost 10% of retirees surveyed owed over $100,000 in retirement. The good news is that over 60% reported no debt or debt under $5,000. Almost 35% of pre-retirees are worried about the amount of debt they are carrying.

Solution - Planning for the Future can Relieve Stress - People who have a retirement plan in place feel better prepared than those that do not:

> Across all age groups, those with an advisor were twice as likely to expect to live a “very comfortable” retirement (42% vs 18% without an advisor)

> Participants with an advisor were less likely to “have no idea” when it comes to how much they need in retirement (72% vs 46%)

> Those with an advisor were less likely to be concerned with outliving their retirement savings (67% vs 44%) 

Over 90% of survey respondents with an advisor are confident in the advice they receive in the areas of retirement income planning, tax planning, estate planning and insurance needs. 

If you’re looking for help planning your retirement, call an expert. Dan Allen specializes in retirement income and protection using a financial planning approach to make the most of your financial resources. Dan is a Certified Financial Planner with his Master Financial Advisor and Elder Planning Counselor designations. He can be reached at dan.allen@manulifesecurities.ca or 519-822-3887 ext 109.