Canadians optimistic on retirement; cite home as nest egg: poll

Freedom 55 may be a dream of the past, but struggle until you’re 69 is also losing favour among Canadians.

A new survey says many of us are now planning to retire at age 66, the lowest age reported in the Sun Life Canadian Unretirement™ Index in four years.

Even though Canadians are living longer, the Ipsos Reid poll commissioned by Sun Life Financial suggests Canadians aren’t interested in working more.

The results come alongside a pickup in equity markets over the past year, which could explain why many Canadians are feeling more optimistic about how soon they can call it quits in the workforce.

The expected retirement age is down from a high of age 69 in 2011, says Sun Life Financial Canada president Kevin Dougherty.

Like any good financial services professional, he recommends Canadians have a plan in place to fund those retirement years.

“With people living longer and more Canadians expecting to retire sooner, it’s important to look at what savings you will need to be fully prepared,” he states.

Many Canadians are counting on their homes to support them as they age.

About a quarter of survey respondents said their home would be their primary source of retirement income.

Asked another way, 18 per cent of respondents expect their homes to be primary source of retirement income, either through a sale or a reverse mortgage, according to the survey results. Among that group, 51 per cent said their home would provide half of more of their retirement funding.

That could be a risky strategy, especially with economists calling for a “soft landing” in Canada’s housing market after a spectacular run up in prices in recent years.

“Real estate will likely endure some difficulty with a slowing Canadian economy and a weak demand for the dollar,” Sun Life Global Investments chief investment officer Sadiq Adatia states.

That may also spur more retirees to sell.

“With an already overheated market, there may be additional pressures from upcoming retirees who feel they lack enough savings for their retirement,” he says. “As a result, they may feel the need to downsize their homes for additional income due to these economic conditions.”

The survey shows 58 per cent of respondents are adamant they aren’t moving out or relying on a reverse mortgage, while 17 per cent aren’t sure.

The survey was done conducted online in November and included 3,005 working Canadians ages 30 to 65.

It shows Canadians, on average, expect about 10 per cent of their retirement income to come from home equity. Another 30 per cent are counting on government plans such as Old Age Security to support them, 26 per cent expect to use personal savings, 23 per cent are relying on employer plans and five per cent are counting on an inheritance. The rest cite “other sources,” which is intriguing in itself.