Financial worries distract employees during work hours—and the road to retirement savings may include several twists and turns.
These are among the key takeaways from a survey of more than 1,500 employed Canadians and 500 retirees in 2024. The survey was conducted by Edelman DXI and commissioned by Manulife and John Hancock Retirement.
“The best way sometimes to get to your destination, which is retirement, involves taking a bit of a detour to address short-term challenges,” said Marc-Antoine Morin, Assistant Vice-President, Product Development, Group Retirement Solutions, Manulife, during a recent Benefits Alliance Voice podcast. Morin spoke with Carolyne Eagan, President, Benefits Alliance, and Rahim Peera, Senior Vice-President, Group Retirement, Penmore Benefits.
In this article, Take 5 for Wellness captures some of the key takeaways from the podcast, “The Evolving Landscape of Retirement Planning and Financial Wellness,” and from the survey’s Financial Resilience and longevity report.
At least 70 per cent of the surveyed employed Canadians worry about personal finances while at work, increasing to a high of 84 per cent among millennials and generation-Z employees (aged 42 and younger). All employees spend an average of 3.3 hours per month during work hours to think about or handle financial matters, noted Morin.
“That builds up when you look at an entire organization,” he said. “And more than half [agreed] they would be more productive if they did not have those financial worries.”
Debt, the cost of living and interest rates are employees’ biggest financial concerns, so much so many can’t make retirement savings a priority right now. Less than half of boomers (42 per cent), currently aged 57 and older, generation-Z (36 per cent) and generation-X (35 per cent) employees felt their retirement savings are on track and all three groups indicated they expect to work past the usual retirement age of 65 in order to increase their savings and/or pay off debt.
“It’s important to have something that can help people save for retirement, but [we need to get more] into the space of offering flexibility in the plan design for people…to just get in the habit of saving,” summarized Morin. “There’s value for [employers] in playing that role.”
For example, half of employees’ payroll deductions for savings can go into a tax-free savings account (TFSA) and the other half into a group registered retirement savings plan (RRSP) or deferred profit-sharing plan (DPSP). Or employees may want to opt to put all their savings into their TFSA and allocate their employer’s contribution to an RRSP or DPSP.
What retirees had to say
In contrast to the results from working Canadians, who felt they would have to work beyond age 65, nine out of 10 of the surveyed retirees retired when planned or earlier. Those who retired sooner than expected did so at age 57, on average. And even among those who retired on schedule, or later than planned, they did so at age 61 on average, well before the traditional retirement age of 65.
Fifty-nine per cent of early retirees and 45 per cent of the remaining retirees wish they had saved more for retirement; and 38 per cent and 22 per cent, respectively, reported feeling that their level of debt is a problem.
Perhaps the biggest takeaway from results is the fact that people are retiring sooner and living longer—and a notable number appear unprepared or unsure about their adequacy of their retirement income.
“When you look at life expectancy from age 65, the improvements have been very significant,” said Morin. “For an average couple, the life expectancy of the last survivor can be well into the 90s. So that’s 30 years, potentially, of income that you have to plan for. [That can seem] frightening, but not with proper planning.”
“The data speaks strongly to plan sponsors that don’t have a retirement plan, and to plan sponsors that do. The bottom line is you need a workforce that’s actively engaged in planning for retirement,” said Peera. “Your benefits advisor is here to help make that happen.”
Benefits Alliance thanks Manulife, a platinum preferred solutions provider, for participating in this article and its parent podcast.