*As an addendum to an article where I was quoted in the Globe and Mail in Oct 2011, I would like to add that I have seen many energetic and enthusiastic people working after the age of 65. I have met a number of octogenarians and when I hit age 55, I had this huge aha moment and said to myself, “wow I have a whole other half a lifetime to really get into the career I’m passionate about”. Certainly the experiences in the first half of my life have set me up for this. As an entrepreneur, when not loaded with assets, I feel the pain of low income as I get my business going.
During my presentations to audiences of a 55+ age group I have come across more people in one room with renewed enthusiasm – some are out there making things happen and others are cheering them on. Whether volunteer or privately hired, I’m here to help individuals clarify their plan about a later life style when it comes to housing, care and support to help make the best of keeping their dignity and grace often in the last 20 years of life; and as they say, having the satisfaction of sliding into home plate after hitting the ball out of the park.
For many Canadians, heavy debt, dwindling pensions and meagre savings are making retirement an ever more distant dream
Thursday, October 27, 2011
TAVIA GRANT and ROMA LUCIW
Remember Freedom 55? Nowadays it’s more like Freedom 65, or 75, if at all.
Older Canadians are staying on the job for years longer than they used to, a shift that will reshape the country’s work force and send ripple effects through every age group.
A sweeping Statistics Canada study found a 50-year-old worker in 2008 can expect to stay in the labour force three-and-a-half years longer than a similar worker in the mid-1990s.
The striking part? That finding doesn’t capture the full impact of the recession and the rocky recovery, suggesting the trend is even more pronounced today. Indeed, employment among older workers hit a record high last year.
Tensions produced by an aging population and the cost of taking care of it are simmering around the developed world. In Italy, a heated debate over the country’s pension system led to blows in Parliament Wednesday. Pensions and cuts are at the heart of Greece’s protests. Cash-strapped Ohio is set to crack down on public-sector pensions.
Canada may have weathered the economic storm better, but it is not immune to these tensions. Changes to pension plans are at the heart of several recent labour disputes, including Air Canada, Canada Post and U.S. Steel in Hamilton.
Postponing retirement has been a steady trend in Canada since the mid-1990s. Before the recession, the reasons were evenly divided between choice – wanting to stay on the job longer – and economic necessity, or needing to.
That’s changed. This year, economic necessity has become the predominant factor, says Susan Eng, vice-president of the retired persons advocacy group CARP.
How did we get here?
Some of the reasons workers are staying on the job longer may seem familiar – slumping stock markets, an uncertain global economy and, of course, indebtedness. Canadians are nearing or entering retirement more indebted than ever, according to a TD Bank report this month.
Four in 10 employees say they now expect to retire later than they had planned, with a lack of savings cited as the main reason, a Canadian Payroll Association poll showed last month.
Plenty of other factors are at play. Low interest rates are crimping savings, while a shift to market-sensitive defined contribution pension plans are forcing many people to delay retirement.
Supporting family members is another reason. The first of the baby boomers turn 65 this year, and many of them must support aging parents along with children that can’t or won’t fly the nest.
A softer labour market and weaker income are also causing retirement dreams to fade. When Katrine Martell left a secure federal government job to pursue her dream of becoming a counselling psychologist, she knew she was taking a financial risk.
Now 55 and struggling with a $45,000 debt, the Montreal resident scoffs at the notion of retiring. “I am not going to retire anywhere near 65. More like 90.”
George Hardy, 60, has also postponed retirement. The senior consultant was laid off from his IT job in 2006. Since then, he’s struggled to find work in his field. “I’m not expecting to be able to retire,” says the Toronto resident who now works for the Nerds on Site franchise. “I would like to have more time for photography and acting and improv. But I still have to work.”
Is this the new normal?
This isn’t just a cyclical move that will reverse itself when and if the economy turns around.
The shift towards postponing retirement is a structural one, global, and “likely to be permanent,” says Ian Markham of consulting firm Towers Watson.
A slow-growth, low interest-rate environment is likely to last for years. As well, medical advances and improved health care mean people are living longer. They will have to work to afford that longer lifespan – and they may well prefer to work, because they feel younger and healthier than in generations past, he says.
Indeed, the Statscan study found that while workers are delaying retirement, the length of retirement hasn’t changed much because life expectancy has grown. The expected spent in retirement was 15 years for men in 2008 and 19 years for women.
What does it mean?
Postponing retirement has multiple ripple effects. It makes work-force planning more difficult because it’s hard to know how long people will stick around. It may also necessitate revising positions to give older workers more flexible or part-time hours.
It’s also trickier to gauge when vacancies will arise. “There are people who may have been planning their whole careers over someone retiring,” Mr. Markham says.
Social effects are bubbling to the surface, too. Seniors’ advocate and consultant Barb Kirby says many of her Vancouver clients have been through layoffs, had permanent jobs turn into contract work, or been forced to change careers late in life.
“Emotionally and mentally, they thought they would retire at 65 – so there’s depression, exhaustion and concern over whether they will ever be able to retire,” she says. “The high cost of living in Vancouver is causing many to downsize,” she says, “but affordable housing is lacking.”
“The middle class is becoming lower class as far as income goes,” she says.
The silver lining: this isn’t an all-bad news story. Having more experienced workers on the job has numerous positive offshoots.
For older workers, staying at work generates extra income, giving them more chance to spend or travel, pay down debts and stay mentally active.
For employers, it alleviates labour shortages and helps pass on knowledge and skills to younger workers. And for governments, it spells more tax revenue and fewer payments in benefits.
Staying employed also carries health benefits. Statscan research has shown that older Canadians who have fully retired typically report worse general health, more chronic health conditions and are less physically active than their counterparts who remained on the job, even after controlling for age differences.