Forgotten decisions: The disconnect between the plan and reality of Canadians regarding health and finances in retirement
Morneau Shepell research report
Many late-career Canadians envision entering retirement in good health. However, a large proportion of those same Canadians report suffering from one or more chronic health conditions (61% of respondents). As a result, some older employees are under-planning for health costs and preparing to over-spend their savings. In fact, surveyed employees plan to withdraw, on average, 15% of their retirement savings per year once retired. This inability to anticipate what the future is likely to hold means that retirees could find themselves without funds when they need them most.
Morneau Shepell’s survey “Forgotten Decisions: The disconnect between the plan and reality of Canadians regarding health and finances in retirement” canvassed both employees aged 50 and older and employers to better gauge their perceptions of retirement readiness. The findings indicate that many soon-to-retire employees have unrealistic ideas of how they’ll manage both their health and their finances in retirement, clearly demonstrating a lack of awareness of how important it is to be prepared for the unexpected. At the same time, the majority of Canadian employers have mistakenly assumed that their retirees understand the limitations of government-sponsored programs and how critical long-range planning is. The survey results reveal that the next wave of retirees may not be as well-equipped for retirement as they – and their employers – may think they are.
The report summarizes where the knowledge gaps exist and also highlights how employers could provide additional, affordable support for their employees before they retire.