Toronto, November 10, 2004  - "Many Canadians now realize that, even if they are working post retirement, they don't have the savings to have or 'do' even a modest retirement lifestyle," says Monique Tremblay, Senior Vice-President, Savings and Segregated Funds, Desjardins Financial Security.

For the last three years, Desjardins has conducted a telephone survey to evaluate Canadians' perceptions, intentions and behaviours concerning retirement. "Results over the last couple of years indicate that people thought they could retire early and be healthy enough to work part-time," says Tremblay. "But, over the last year, all the publicity about the rising costs of medical and health care, and the reduced levels of provincial government support, has driven home the point that ill health can quickly erode a life time of frugal living," she adds. "Canadians now realize they need to save more money to pay for these types of expenses, before they retire. Fear of ill health may keep people in the workforce longer than everyone's previous projections," Tremblay says.

In the case of an unfortunate event requiring healthcare services for more than three months, 72 per cent of Canadians believe the healthcare services provided by their provincial governments would only partially cover medical and hospital costs. Desjardin's latest retirement survey results confirm that more than 60 per cent of workers 40 year old or over, and those who are already partially retired, realize they must increase their retirement savings in case of health problems during their retirement.

Desjardins' 2004 survey also indicates that nearly 50 per cent of workers aged 40+ years and who wish to retire progressively plan to be self-employed. Self-employed work is extremely attractive to those who do not participate in a company pension plan. "But, if they are not healthy enough to create a new career, and to have the energy to build the contacts needed to succeed, they will not be able to shore up their savings," says Paul Rainford, Desjardins' Regional Vice-President, Savings for Groups and Businesses.

As noted, almost half of working Canadians (48%) want to be self-employed when retired. "This creates business opportunities in two areas," Rainford says. "First, since many new entrepreneurs will no longer be able to participate in their workplace pension and group RRSP savings programs, they will be turning to their financial advisors and accounting professionals to help them increase their savings levels, and to deal with, among other things, unfortunate events like a debilitating illness. Second, more than half (59%) of Canadians 55+ years, fear the lack of physical mobility, and want to improve their physical fitness levels. This is likely to increase the demand for fitness and sports centres, exercise equipment and support services," adds Rainford.

About Desjardins Financial Security

Desjardins Financial Security, a subsidiary of the Desjardins Group, specializes in life and health insurance as well as retirement savings.  More than five million Canadians coast to coast count on Desjardins for their financial security needs.  The company employs 3,675 people, manages more than $14 billion in assets, and has offices in Vancouver, Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Levis and Halifax.  In keeping with our commitment to the health and well being of Canadians, Desjardins is a proud sponsor of the Heart and Stroke Foundation, Baycrest Home for the Aged, and the Institut universitaire de gériatrie de Montreal, among others.

About SOM

In operation since 1986, SOM specializes in market research and public opinion polls with the Canadian population. The company conducts research activities in Canada, the United States and France.

Fact sheet
   2 pages - 14 kb

Canadian' Dreams of Traditional Retirement Evaporate - Retirees Age 65+ Face the New Reality: "Progressive Retirement"

Toronto, Feb. 16, 2004 - Retirement is no longer an event. It is an evolutionary process as being redefined by the baby boomer generation, according to the annual Desjardins Financial Security survey on retirement conducted by SOM research, Montreal. Gone are the days of retiring with an abrupt stop and never working again for monetary gain.

Although, on average, of those Baby Boomers surveyed (workers 40 to 54 years who wish to retire at 58 years) 50 per cent of these respondents think that it will not be possible for them to retire at this age. The key stumbling block they indicate is that they only have 11 years, on average, to reach the amount of savings they believe is required to fund a comfortable retirement. The majority of Canadians over 40 years old (92 per cent) thought that retirement at past age 65 would be attainable, and the figure drops to 67 per cent for those targeting retirement between the ages of 56 and 65.

"The new reality shows that Canadians need to forget their dream that they can stop working at age 65," says Taylor Train, Director of Business Development for Desjardins Financial Security. "People need to recognize that longer life spans reaching into the early eighties, on average, will result in a period of some form of convalescence during retirement that requires out-of-pocket costs for medical care. Then one compounds that with the weak financial market performance experienced over the past years, and workers have to face a new reality for their retirement."

"Independent workers are the future of the work force, particularly as we near 2011 when baby boomers begin to retire," says Paul Thériault, President, Direct Sellers Association of Canada (DSA). "In the area of direct selling, 90 per cent of independent sales contractors operate part time with flexible hours. For those involved full time, the trend is already here with 14 per cent being 65 years and older." Thériault adds, "Surveys indicate that the primary reason for becoming a direct seller is to generate income, followed by other reasons such as recognition and access to discounts on products."

Adds Train,"Baby Boomers will create a new generation of progressive retirees as Canadians need to earn additional income to top up their savings or pension to maintain a standard of living that meets their requirements. This has become apparent with the rising number of Canadians who are self employed working in new careers." The survey revealed that 61 per cent of Canadians aged 40 years or more are planning a phased in form of retirement, that being progressive retirement. Those wishing to retire, 61 per cent plan on becoming self employed and working 21 hours a week on average.

These people are still officially retired, as per the 'old' definition, but gainfully employed before they stop working all together. The key regional difference is that respondents from the Atlantic Provinces indicate a preference for complete retirement (54 per cent versus 41 per cent for partial retirement).

The main reasons cited for progressive retirement include:

• Not to be totally inactive: 83%
• To maintain standard of living for a while: 82%
• To do some worthwhile activities: 79%
• To get some additional income: 75%
• To have social benefits: 51 %
• To ensure continuity of the job: 43%
• To have a job they wanted for a long time: 34%
• Other: 10%
   

While it is evident that inactivity is the main reason cited for progressive retirement (83 per cent), having additional income, other safety nets such as insurance and social benefits are also important to those entering their retirement years.

"It is incumbent on financial planners, employers and the government to educate individuals on not only their financial needs for those twenty years on average of retirement after age 65, but also, within that time frame, the duration, which could be over several years, that retirees will be expected to pay old age home and medical costs for various ailments or illnesses," says Train. "The new retirement landscape demands more than putting money aside for day-to-day living."

Canadians, particularly retired people are paying more attention than last year to savings management. Compared to the January 2003 survey, there is a significant increase in the proportion of fully retired Canadians who pay special attention to the accumulation of savings (85 per cent versus 72 per cent), who have a retirement savings management plan (65 per cent versus 54 per cent), and who have prepared this plan themselves (43 per cent versus 29 per cent).

"Even as stock markets improved in 2003, most retired people are invested in what they consider safe investment products such as guaranteed investment certificates or term savings and these vehicles are the source of their post-retirement income," explains Train. "With such low interest rates being offered by safe investment products such as these, Canada's retirees need to closely manage their savings."

"Also, employers need to rethink how to capture what retirees take with them and how to create an intergenerational transfer of skills," adds Train. "Otherwise years of corporate dollars spent on culture and skills training walks out the door, taking more years and dollars to amass the same knowledge in new workers."

Of those surveyed, 71 per cent support the upcoming changes to fiscal laws that allow Canadians to work beyond the age of 65, while continuing to receive their old-age pension without penalty.

Progressive retirement, the new reality, will give Canadians the choice to decide when and where to work, for how long, and on what projects as well as what age they secure retirement," says Train. "But this will all depend on the changes they make now in their approach to financial planning."

About the Survey

SOM, a marketing and research company based in Montreal, conducted the survey on behalf of Desjardins Financial Security between December 5 and December 22, 2003. In total, 1,501 interviews were conducted with a representative sample of Canadian adults 18 years and older. The sampling plan provides proportional estimates with a maximum margin of error of plus or minus 2.6% at a 95% confidence level. The data was statistically weighted to accurately reflect the composition of Canadians by region, gender and age based on Statistics Canada's 2001 Census information.

About Desjardins Financial Security

Desjardins Financial Security specializes in life and health insurance including retirement savings products and is the fifth largest life and health insurer in the Canadian market. More than five million Canadians count on Desjardins Financial Security every day for their financial security needs. A member of the Desjardins Group, Desjardins Financial Security has offices in all major cities across the country, including Vancouver, Calgary, Regina, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Lévis, Halifax and St. John's.

About Direct Sellers Association of Canada

The Direct Seller Association was founded 50 years ago and is the national trade association of leading firms that manufacture and distribute goods to consumers through independent sales contractors.

Survey Highlights
   3 pages - 103 kb