3 misconceptions about retirement in Canada

A new report found that the reality of retirement in Canada isn't quite what people expect it to be.

The online poll of 1,800 people conducted by Ipsos on behalf of RBC revealed notable misconceptions surrounding retirement. They include the timing of that last day on the job and how Canadians actually spend their days after clocking out.

Respondents were Canadians 55 years and older, some in their pre-retirement years and others who have already retired. An important caveat is that all said they have retirement assets of $100,000 or more.

"Our expectations for retirement aren't always met," said Rick Lowes, vice president of retirement strategy of RBC.

Here are the three common misconceptions highlighted in the report.

1. Most people don't know their retirement date far in advance

So much for counting down the days to retirement months in advance. Among the survey respondents, 55 per cent expected to know their retirement date a year or more in advance. But just 39 per cent had that much notice.

In fact, 16 per cent had no advance notice of their retirement. The results varied from province to province: Respondents in Atlantic Canada were the most likely to say they had no notice before their retirement day arrived. 

Marissa Lennox, chief policy officer for CARP, the Canadian Association of Retired Persons, said health is the No. 1 reason people end up retiring earlier than expected.

"People in bad health often overestimate how long they can work," she said. "The second reason is familial issues. Someone may choose to leave the workforce to care for a parent, spouse or grandchild."

Mandatory retirement ages are no longer legal, but things like lay-offs, restructuring, and redundancy brought about by technology also push people into retirement with little notice, Lennox said.

2. Only a minority become 'snowbirds'

Retiring to sunnier climes is a common Canadian dream. Close to a third of poll respondents said they expect to be "snowbirds" who spend the winter months in warmer locations such as Florida, Arizona or Mexico.

But of those respondents who had actually retired, just 18 per cent actually fly south for winter. That stat doesn't surprise Lennox. 

"The fact is while it's nice to fantasize about retiring in a little beach town in paradise somewhere, or spending the better half of our lives travelling the world, it's just not realistic for most," she said.

The survey found that those from Alberta were the most likely to be snowbirds at 32 per cent, followed by retirees from Saskatchewan and Manitoba at 23 per cent.

3. Few people work part-time after retirement

Many Canadians plan to have some sort of second act in retirement, working either full or part-time once their main career has come to an end. In fact, they may be counting on it to pay the bills, said Lowes.

Among the poll's respondents who hadn't yet retired, 50 per cent said they expected to work at least part-time but just 11 per cent of retirees polled said they'd found work.

"If we haven't had early notice of retirement, and we haven't got plans in place, and we may be relying on work to help us achieve our goals, that may not be as available as we'd hoped," he said. Retirees may discover that it's harder to get a job than expected, or at least the kind they'd hoped for that will accommodate a semi-retired lifestyle.

Edmonton retiree Ernie Zelinski, author of How to Retire Happy Wild and Free, said people may discover that the type of work they can get in retirement isn't worth it.

"If you've been making a job at $120,000 a year and then you lose your job at 55 and then you have to work a job at $15 an hour, is that going to be sufficient? Those factors have to come into effect too. Would you enjoy being a Walmart greeter or anything else that may be available to you?"

Lennox said she questioned the report's finding about the small portion of working retirees, given the number of CARP members who say they count on income from part-time work.

However, she said one explanation could be that since so many are retiring later in life, their ability and desire to work once they've finally hung up their hats isn't what they expected.

"The trend is that people are retiring in their 70s and 80s, so the likelihood of going back to work after that point is much lower," Lennox said. "We're thinking of the traditional retirement age of 55 or even 65, and that's just not what's happening today." 

The findings are part of a poll that was conducted between April 2 and April 8, 2019. For this report, the data is drawn from a sample of 1,800 people age 50 or more who have retirement assets of $100,000 or more. The results are considered accurate to within +/- 2.6 percentage points, 19 times out of 20.