Turning 65 no longer means accepting a gold watch and a handshake, and sailing off into the sunset. Stepping down from the job might come much earlier or later, or not at all.
Although many members of the baby boomer generation now entering or approaching retirement are better off financially than previous generations, some will need to explore ways to supplement their retirement income.
Job layoffs and the stock market downturn a few years ago have taken their toll on what some have been able to put aside. The baby boomers are also a "sandwich generation," often caught between supporting elderly parents and educating young adult children.
What's your retirement style?
Boomers are shaking up old ideas about what it means to retire, but financial issues remain a driving concern. Photograph by Getty
And many members of the "me generation" have been big spenders, happily running up debt to enjoy the good things in life.
"I see people close to retirement who are making $140,000 a year, but will have to live on $35,000. They haven't been putting money aside," says Clay Gillespie, a financial adviser and vice-president of Rogers Group Financial in Vancouver.
These individuals will probably have to downscale their lifestyles in retirement. Or they may opt to bite the bullet now, trim their sails, perhaps remain longer in the workforce, maximize their RRSP contributions and explore every other opportunity for growing their retirement assets.
The concept of retirement is being turned on its head by the greying of the baby boomers. The oldest members of this massive cohort of more than nine million people turned 60 last year. By 2026, one in five Canadians will be 65 or older.
But there are huge differences within the group that will determine how individual Canadians will spend their 60s and beyond. For Lou Allin in Sooke, B.C., "retirement" has meant leaving teaching and pursuing her passion for writing mystery novels.
Eighteen months ago, she retired at age 60 from a 28-year career teaching English at Cambrian College in Sudbury, Ont.
Five years earlier, she'd published Northern Winters are Murder, the first book in her murder mystery series set in the Sudbury area, and she wrote her next three books on weekends and holidays. When she became eligible for a pension from the college, she decided to write full time. Since "retiring," she's finished the fifth book in the series, started a new police procedural series and is on the road publicizing her books. Last summer, Allin moved to Sooke, and her writing desk now has a view of the Washington coastline across the Strait of Juan de Fuca.
Judy Cutler, the 65-year-old Ottawa-based director of government relations at Canada's Association for the Fifty Plus (CARP), says she can't afford to retire. Fifteen years ago, she left her job as associate director of Montreal's Centaur Theatre to care for her terminally ill mother. When her mother died two years later, it took Cutler a year to recover from the stress of full-time caregiving. Then she spent another year looking for work until joining CARP.
"I was a single mother, and I raised and educated my son. I used up any savings I had in the four years I wasn't working," she says. "So, unless pensions double, I'll be at work."
Cutler is fortunate that she loves her work. In her 11 years on CARP's advocacy team, she's brought seniors' issues -- including home care, caregiving, affordable housing and poverty -- to the attention of government and the public.
"Retirement used to mean sitting around and waiting for death," says Jerry Stilson, a partner at Cenera Inc., a Calgary-based career consultancy. "Today, it means retiring into something, maybe even living your passion."
At 64, Stilson has no intention of leaving the business he helped start up 10 years ago. "I love what I do," he says, "but I'm taking more time off work -- most Fridays and longer holidays." He plays in a 60-plus hockey league (his team is the Grumpy Old Men). He's also taking a navigation course because he's buying a timeshare with a friend in a 14-metre sailboat and plans to sail Canada's West Coast.
"The baby boomers will upset our assumptions of what it means to be retired," Stilson says, "and the impact will be far-reaching."
According to Statistics Canada's September 2006 Labour Force Survey, a third of a million Canadians are working beyond their 65th birthdays. About 35 per cent of them are age 70 and older, and more than 50 per cent are self-employed.
"We used to talk about the 'three stages of man' -- childhood, adulthood and old age. Today, there are two stages to retirement: active retirement and classic retirement," Nancy Conroy, a retirement planner and president of the Conroy Group in Ottawa, told the 2006 Summit on the Mature Workforce held in Toronto in November.
"The last, or fourth, stage doesn't commence until well beyond 70, even 80. About a quarter of those who work in retirement do so to supplement their income. But others just want to keep active and productive."
Work keeps older people healthier, Stilson notes.
"The medical community is saying that the longer people work, the healthier they stay," he says. "Older people who remain active, who live their passion, get a whole new lease on life. It can add 10 years to a lifespan."
Productive work can mean volunteer work. The 2004 National Survey on Giving, Volunteering and Participating shows that boomers are now volunteering at good rates.
And work may mean "living your passion" for those who can leave a salaried job, as Allin has done. Most Canadian fiction writers, she notes, cannot make a living from their craft but a company pension can make it possible to write -- or paint or sculpt -- full time.
And it can mean part-time work. People who transition into retirement generally live longer, Gillespie notes. "Complete retirement can be a stressful adjustment," he says. "It means living on your investment income rather than on earned income, and perhaps worrying whether you've put enough away. It also means coping with the loss of identity and purpose you had on the job. It means carving out a new life."
But for many older Canadians like Cutler, work is a financial necessity. They simply haven't put enough money away. And, as mandatory retirement disappears across the country and labour shortages result from Canada's aging workforce, they will increasingly be able to stay in the workforce.
But is counting on a salary a smart "retirement" plan? Gillespie says he talks to many people who plan to keep working until they die. "The truth is your health may not allow you to work as long as you like," he says.
A survey by Desjardins Financial Security released last November showed more than a third of Canadian workers said they didn't start saving for retirement until they were more than 40 years old. This has troubling implications because retirement can last a lot longer than people once thought, possibly one-third of a lifetime.
But it's never too late to start saving and investing for retirement, financial advisers say.
It may mean looking at an investor's current lifestyle and retirement expectations, and downsizing.
It will involve taking inventory of total financial assets, and perhaps liquidating real estate or other holdings. It may mean opting for more tax-efficient investments. It could mean taking advantage of income-splitting opportunities.
And Gillespie says full retirement, when it comes, may not be as expensive as many think.
"The first two years can be the most expensive," he says. "There's a lot of pent-up demand. People can go through a whack of money, booking cruises and such, and can put a big dent in their savings."
He added: "I tell clients to put aside, say, $50,000 as play money, but that's their limit. They have to let the rest of their assets generate returns."
The same discipline may be needed to safeguard the retirement nest egg all the way down the line. This may involve working with a financial adviser to determine how much money should be withdrawn at different stages of retirement and perhaps investing in long-term-care insurance for the final years.
"The focus in the investment industry is now on making clients' money last for the next 30 years," Gillespie says.
But after an initial spending spree, he says people tend to slow down. As they age, people travel less.
A 2005 survey by Desjardins Financial Security showed that exotic travel in retirement was the No. 1 dream of Canadian workers over age 40, but this takes a backseat to the desire to stay healthy once people actually retire.
There's plenty of upside to the boomers' retirement, Conroy says.
"Baby boomer women are the first female cohort to have participated in the labour force for most of their adult lives. Many have contributed to company pension plans, can expect to receive Canada Pension Plan benefits and Old Age Security, and have investments. There are more two-pension couples than before.
"It's the people who are now in their 30s and 40s who may be more vulnerable in years to come as defined-benefit company pensions disappear," she says.
THE CHANGING NATURE OF RETIREMENT
Jerry Stilson, a partner at Cenera Inc., a Calgary career consultancy, predicts baby boomers will change the nature of retirement. Among the effects:
- Work: "With labour shortages expected in coming years as the boomers retire," Stilson says, "we'll see strategies to keep older workers on the job: flexible work schedules, part-time work, seasonal work, job-sharing, working from home."
- Leisure: "We're already seeing a booming leisure industry and travel geared to active, older people," he says.
- Housing: "Older people are healthier and will be able to stay in their own homes longer. But some are moving into condos downtown where they can be close to what's going on and spend extended time at their vacation homes."
Housing for the frail elderly, he adds, will have to change dramatically in the next decades. "The boomers will resist the present model of nursing homes."
- Relationships: Couples, Stilson notes, have to make significant adjustments when they retire. But if they've planned ahead, the impact can be very positive. The boomers are more aware and are making better decisions affecting relationships than previous generations. As they begin working less, this will have a positive effect on their family relationships.
By Rosemary McCracken© CanWest News Service 2007
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