Retirement planning the reality vs the myths

A report by the Royal Bank found that the reality of retirement in Canada isn't quite what people expect it to be. Respondents were Canadians 55 years and older, some in their pre-retirement years and others who have already retired. Retired Canadians called out three key misconceptions about retirement:

Thinking you’ll know your retirement date well in advance?

While more than half (55%) of pre-retirees aged 50+ expect to know their retirement date more than one year in advance, this was true for only 39% of retirees aged 50+… and 16% had no advance notice at all. I fit into that category, I decided to retire only about six weeks before I retired, that was a mistake. If you can plan so you can get ready for retirement.

Expecting to winter in warmer climates as a snowbird when you retire?

Close to one-third (29%) of pre-retirees expect to be snowbirds, but only 18% of retirees are flocking south in the winter. Ranking higher for retirees: spending time with family (51%) and friends (48%). We did spend time immediately after retirement in warmer climates, but the novelty wore off very fast. We found that in the first 10 years of retirement we spent more time with family and friends which is in line with most people who retire.

Planning to return to work in retirement?

While half (50%) of pre-retiree’s plan to work in retirement, only 11% of retirees responded they had returned to full-time or part-time work. The main reasons why pre-retirees say they plan to go back to work: to stay active, mentally (64%) and physically (48%); to stave off boredom (44%); and to generate income (43%). I was one of the 11% that worked after I retired, and I worked for about 8 years before I fully retired. I enjoyed working but I found it restricted many of the other activities I became involved with after I retired so I had to choose work or fun. I chose fun.

RBC expects Boomers to sell off their homes

The following is from an RBC Wealth Management Research-Insights report on Navigating-The-2020s-How-Canada-Can-Thrive-In-A-Decade-Of-Change

A national challenge: Finding homes for ageing Canadians.

In 2020, 45 percent of Baby Boomers will be 65 and over, with the others joining their ranks over the decade. By age 80, one in ten will be living in a seniors’ residence or nursing home, a number that will jump to one in four by the time they’re 85.

There will be about 650,000 people living in Canadian seniors’ residences or nursing homes in 2030, up from 450,000 now. Public and private resources needed to build the extra capacity will cost at least $140 billion.

The opportunity: One of the defining characteristics of the last decade was worsening housing affordability, both for homeowners and renters. This is likely to persist in the 2020s, especially in Canada’s largest cities, as strong immigration levels drive demand for housing. The steep cost of housing will make more of us renters—up to one million more, by our count. It will also fuel the growth of smaller housing markets beyond the more expensive cities, where younger Canadians have a better shot at buying their first home. The overall homeownership rate in the country is likely to fall from almost 68 percent in 2016 to 64 percent by 2030.

Building for the future

Canada’s aging population will offer an opportunity to address some of the country’s housing challenges. Over the coming decade, we expect Baby Boomers to ‘release’ half a million homes they currently own—the result of the natural shrinking of their ranks, and their shift to rental forms of housing, such as seniors’ homes, for health or lifestyle reasons. 

Downsizing boomers will put even more units on the market.

The homes Baby Boomers put up for sale—often units well suited for families bought decades earlier near urban cores—will be a long-awaited supply for new generations of buyers. If the price of these properties will be hard for first-time homebuyers to swallow (Baby Boomers won’t sell cheap), the turnover will bring opportunities for others to add to, and transform the housing supply. For example, multiple units could be built on a lot previously occupied by one dwelling. Just the kind of gentle increase in density that many see as a key part of the housing affordability solution in 

Canada’s largest cities.

To maximize this transition, though, more progress will be needed to modernize zoning bylaws and other restrictive housing supply policies—complex and emotionally charged issues to say the least. More than anything, this modernization will be critical in the decade ahead for new generations of Canadians to realize the same housing dreams as their Baby Boomer elders did decades ago.

Should I go or should I stay now?

I am a big believer in serendipity so when in three conversations over a few days, I heard about seniors housing I thought there might be some interest in this topic. One of the people I phone as part of the Phone Buddies program I am involved in was talking to me about moving. They were in their mid-80’s and they were thinking of moving into a smaller home or a retirement home. Another person I knew stated that Baby Boomers do not want to move into Retirement living arrangements.

Nine in 10 seniors intend to continue living in their current homes over the next five to 10 years.Leading reasons for wanting to stay in their current homes include liking where they currently live (85 percent), having family and friends nearby (66 percent) and not wanting to deal with the hassle of moving (50 percent).

Finances also play a role in this decision: 26 percent of seniors planning to age in place, say they cannot afford the cost of moving their belongings and more than one in five (23 percent) believe their home would not sell in the current market.

Most groups report high levels of confidence that they will be able to stay in their homes without having to make any significant home modifications (85 percent of respondents aged 60 to 64; 82 percent of respondents aged 65 to 69; 86 percent of respondents aged 70 or older).

Nearly one in five baby boomers aged 60 to 64 (18 percent) believe the housing options available to them are unaffordable.

There are other reasons for wanting to age in place some of them are:

We are retiring later than any other generation and most of us are still in the workforce, making us the workforce’s fastest-growing generation. There are a few reasons why this is happening. Like me, many others retirement plans took a hit from the 2008 financial crisis, some have not saved enough for retirement and others are staying in the workforce because it keeps their mind sharp and days full. According to an AARP survey, 40 percent of Baby Boomers said they plan to “work until I drop.” In Canada 5 million boomers set to turn 65 in the next 10 years, the age of retirement will continue to creep up.

Boomers will live longer because of healthier choices and advancements in technology. From 1950 to 2014, the average life expectancy rose steadily. Men’s life expectancy rose from 65.6 to 71.,1 and women’s rose from 76.1 to 81.1. Higher life expectancies mean more opportunities to be active including working and truly enjoy the later years in life, which is exactly what we are doing.

Many of us who think of retirement homes think of the idea that one size does not fit all, nor does it fit most. When it comes down to the life we want to live, what we want for ourselves isn’t going to be the same as what someone else wants. We are helping to shape the senior living landscape by wanting customizable living options through their housing, amenities or community events. They’re also seeking out living arrangements where it is easier to connect and make friends with the people living in the community.

We see retirement as the time to dive into life’s joys: hobbies, passions and making sure you have the amenities available to pursue those and for most of us that means living at home, not moving to a retirement community.

Asking questions

Ask more questions, and you may be surprised by what you find out. When I was working on the University paper, the editor took me aside on the first day and said, our job is to ask questions. Use the following questions format, Ask Who, What, When Where, Why and How. By asking these questions you will find out a lot about the topic.

You might never guess it, but sometimes, people get frustrated with not knowing. A classic case happens at homecoming parties when the guests hear the guest of honour lament, "Gosh, but I had no idea! I never would have guessed! I didn't know I was so wonderful! I didn't know I had such an effect on others! I didn't know I was so responsible for my thoughts, words, and deeds! I just didn't know!"

But it's even worse for them when others reply, "Yes... but you could have. All you had to do is ask the right questions, and listen to the answers.

Many of us can ask questions, but few of us take the time to hear the answer, because they believe the axiom, never ask a question if you don’t know the answer. That is, in my mind, a false axiom, the reason to ask a question is to find out what is going on not to re-enforce your own preconceived ideas or thoughts.