Survey from the National Institute on Ageing identifies key retirement gaps, author highlights what the advisory business can do
The painful reality of Canadian retirement appears to be how few of us are actually ready for it. Across the three core metrics measured by the National Institute on Ageing (NIA) at Toronto Metropolitan University — health, wealth, and socialization — retirees and pre-retirees are in a difficult position. Savings rates are low, social networks are weak, and physical health remains a key corollary with better financial and social outcomes.
Addressing these gaps requires a mindset shift on the part of Canadians and the financial services industry. That shift may involve more than the means by which advisors address retirement issues for their clients, it could also involve a reset of how we measure wellness in retirement. According to the newly developed Material Deprivation Index (MDI), 20 per cent of Canadians over 50 experience a poverty-level standard of living, over double the official measure in Canada which focuses just on income. Natalie Iciaszczyk, program manager for survey research at the NIA and one of the authors of the 2024 NIA Ageing in Canada Survey explained how the metrics we use can show us a clearer picture of retirees’ wellbeing and pre-retirees readiness.
“The MDI is a new, alternative approach to measuring poverty. Unlike methods typically used to assess poverty in Canada—such as the Market Basket Measure (MBM) and the Low-income Measure (LIM), which focus primarily on household income levels—the MDI assesses material outcomes and focuses on what households can actually afford,” Iciaszczyk says. “The MDI measure is based on a list of 11 goods, services and activities that most people consider necessary for maintaining an acceptable standard of living in Canada such as dental care, transportation, footwear. You can learn a lot more about people’s financial situations if you take a look at these items rather than income alone.”
When speaking directly to Canadians over 50, the NIA team found a significant gap in retirement preparedness. Only 34 per cent of that population believe they can afford to retire when they want. 19 per cent of that population have no retirement savings and one in four Canadians have less than $5,000 saved for retirement. Iciaszczyk says this highlights just how financially vulnerable many older Canadians are.
Those Canadians who appear more ready for retirement tended to be homeowners and have higher income or access to a workplace pension. Other non-financial metrics appeared correlated, too. Canadians who tended to be healthier and have more social links also tended to be more ready for retirement.
On those social metrics, the survey also found surprising gaps among Canadians aged 50 and over. More than one third of Canadians struggle with weak social networks and only 39 per cent say they engage in social or recreational activities at least once a week. 23 per cent said they never engage in these activities.
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While 64 per cent of respondents said they could access the healthcare services they needed, access begins to fall when examining Canadians who lack adequate financial resources. Across those social and health metrics in retirement Iciaszczyk says material wellbeing — or a lack thereof — plays a crucial role. She says that advisors can make a number of key interventions in the leadup to a client’s retirement that can help improve their financial, social, and physical well-being.
Iciaszczyk identifies CPP/QPP benefits as a key step. Despite the advantages that come with waiting until age 70 to claim these benefits, 90 per cent of Canadians claim their benefits by age 65. If advisors work to show more Canadians whether they can afford to delay their claims, they might make an immediate impact on some of the gaps the NIA survey identifies. She believes the whole industry can work to improve outcomes and shift mindsets by asking Canadians a few key questions in the leadup to retirement.
“The financial services industry needs to help individuals and couples contemplate, understand, prepare and manage post-retirement finances in line with their consumption needs and preferences,” Iciaszczyk says. “We can encourage Canadians to ask themselves key questions like: ‘Do I have enough retirement income to fund my lifestyle?’ ‘ What are the adverse financial consequences if the assumptions (investment returns, inflation, longevity, homecare needs, etc.) don’t work out according to plan?,’ and ‘What options do I have to create a better, more secure retirement for me and my family?’”
