Canadian Aging Trends: Considerations for Retirement Strategies

The Canadian Longitudinal Study on Aging (CLSA) has just released its first report on a broad range of physical, mental and social aspects of aging in Canada. Why should tax and financial advisors care about these trends at this time? The key findings may surprise you, as the vast majority of seniors say they are managing very well.

That’s especially good news because Canadians are living longer than ever. The CLSA is a long-term, national study that is following approximately 50,000 Canadians for at least 20 years to track biological, medical, psychological, social, lifestyle, and economic changes and trends. The men and women participating in the study are between the ages of 45 and 85 when recruited.

In the big picture, there is lots of positive news in this CLSA report. Close to 80 percent of retirees say they manage very well or quite well, 17 percent say they “get by alright” and only about 3 percent report not managing very well or having financial difficulties. And over 90 percent describe their health as good, very good or excellent, even those aged 75 and older.

This first CLSA report, based on data collected in the first five years of the study (2010-15), offers a wealth of information as well as a baseline on a broad range of physical, mental and social aspects of aging. Although you have to dig a little deeper to find the financial repercussions of this report, it’s critical to know the bigger picture so you can help your clients with the specifics in their lives, particularly retirement planning, the economic implications of caregiving, changes in work/family balance and other financial aspects of aging.

Furthermore, the findings of this long-term study will shape policies and programs, including tax and financial changes, for many years to come. Some key findings of the report of particular interest to advisors:

• In 2017, for the first time, the number of Canadians 65 and older was larger than the number of children under 15; and the proportion of the population aged 65 or more is forecast to increase from 14 percent in 2010 to approximately 23 percent to 25 percent by 2031. Over the next 20 years, our increasingly aging population will challenge the affordability of health and social care at unprecedented levels.
• Participants in the study generally have a high level of education: 74 percent have a post-secondary degree or diploma, 7.5 percent have some post-secondary education and 11 percent have graduated from secondary school; only 7 percent report not completing their high school education.
• The highest proportion of participants (33.4 percent) reported total annual household income in the $50,000-100,000 range; only 5.7 percent have annual household income less than $20,000 (of those, women aged 75-85 are the largest group, accounting for 12 percent of this low-income cohort).
• The average retirement age increased from 61 in 2005 to 63 in 2015 and is expected to continue increasing.
• About 45 percent say they are completely retired (that jumps to 89.5 percent of women and 86 percent of men aged 75-85); 10.8 percent report that they are partly retired.
• The employment rate for both men and women 55 and older has been increasing, and there is a growing trend of older adults re-entering the workforce after retirement, mostly returning to part-time employment (70 percent of women who returned to work and 54 percent of men).
• As a percentage of the retired population, about 20 percent of women and 30 percent of men “unretire” for some period, a significant minority citing financial reasons (although only 5 percent of the unretired report that their standard of living is inadequate).
• Among those who “unretired,” 32 percent of women and 22 percent of men returned to their pre-retirement employer, 57 percent of women and 60 percent of men started with a new employer, and 10 percent of women and 17 percent of men started their own business.
• Of those who unretired, only 37 percent of women and 41 percent of men cited financial reasons as a factor in their decision. More likely reasons for returning to work are seeking a sense of purpose, improved health and social interaction, all of which are key determinants in aging well.
• A continuing trend of extended working lives may raise the overall standard of living of older Canadians in the future as well as tax revenues, and could help to take the pressure off  government budgets.

As the study unfolds and new waves of data become available, it will be key for tax and financial advisors to stay on top of the emerging patterns and trends to ensure that they can help their clients plan for a long, healthy and fulfilling life.

Additional educational resources: In addition to staying informed about broad social trends, acquiring specific skills and knowledge will equip you to guide your clients toward, and through, retirement. Knowledge Bureau designations, such as MFA-Retirement and Estate Services Specialist and the Real Wealth Manager program, will enhance your ability to be a trusted advisor to your clients in these areas.

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