Financially Speaking

What is retirement? Well, these days, it can be anything you want it to be. Today’s retirees are living vibrant, active lifestyles for many years – lifestyles that will require significant additional income. How will you ‘shape’ your retirement? Let’s look back at a brief history of retirement (and explode a few retirement myths) to see what’s in your future.

A brief history of retirement

• Retirement is a relatively recent development in human history. The “industrial age” of the late 18th and early 19th century replaced an economy based on manual labour with one dominated by machine-based industries. Still, the demands of physically exhausting labour made it almost impossible for ‘older’ workers to stay on the job. It was easy for them to buy into the idea of retirement as they hit their sixth decade.
• The cornerstone of Canada’ retirement income system, the Old Age Security (OAS) program began in 1927 and was updated in 1952 to provide a modest pension to eligible seniors as early as age 60. Among many subsequent amendments: the introduction of the Guaranteed Income Supplement (1967); the establishment of the Spouse’s Allowance (1975); and the extension of benefits to same-sex common-law partners (2000).
• Registered Retirement Savings Plans (RRSPs) were first introduced in 1957.
• The Canada Pension Plan/Québec Pension Plan (CPP/QPP) were enacted in 1965 to provide a monthly income to retirees as early as age 60 with payments dependent on how much a person paid into the plan while working.
• The most significant retirement trends over the past 30 years are driven by people retiring earlier and living longer. That means the period over which retirees must fund their retirement has increased significantly from an average of five years in 1970 to approximately 20 years today – and is expected to reach 30 years in the near future.

Retirement myths

• Retirement means you no longer work: Retirees today believe in “work at any age” – either full-time, part-time, or as volunteers.
• Retirement begins at 65: Increasingly, Canadians are choosing to retire earlier – or at least on their own timetable – to explore new avenues in life.
• A life of ease is every retiree’s goal: More and more, retirees are opting for a retirement that includes a balance of learning, work (paid and unpaid) and leisure – challenging themselves through all their years.

The changes in retirement lifestyle expectations, increased longevity, and your personal goals will help “shape” your retirement. But if you’re worried about the possibility of outliving your savings, take action now and talk to your professional advisor who can help make your retirement dream a reality for a lifetime.