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Canadian workers prepared to pay for retirement security

Staff writer |
Despite some improvement in their financial situation and retirement confidence, more than six in 10 Canadian employees (62%) would be willing to pay more out of their paychecks in order to receive a more generous retirement benefit, according to a survey by Willis Towers Watson.

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A slightly higher number (65%) would be willing to pay more in order to receive a pension that was guaranteed for life.

The Global Benefits Attitudes Survey of more than 2,000 Canadian employees found that roughly one in four (26%) believe they will need to delay their retirement past age 65, with nearly one-third (32%) anticipating retiring later than previously planned.

Overall, 13% believe they’ll have to work past age 70 to live comfortably in retirement; another 3% don’t think they’ll ever be able to retire.

“Canadian workers remain concerned about their retirement financial stability,” said Karen Burnett, senior retirement consultant at Willis Towers Watson. “Some will be fortunate and inherit wealth from their ageing parents. Others may need to overcome inadequate savings by selling assets such as their homes before they would otherwise prefer. For many, however, the default option will be to work longer.”

The survey results caution, however, that employees who expect to work longer are less healthy, more stressed and more likely to feel stuck in their jobs than those who expect to retire earlier.

According to the survey, 54% of employees expecting to retire after age 70 have above average stress levels, compared with 30% of those expecting to retire before 65.

For those planning to retire after age 70, less than half (46%) say they are in very good health, while nearly two-thirds (61%) of those who expect to retire before age 65 state they are in very good health.

Additionally, 36% of employees planning to work past 70 feel they are stuck in their jobs, compared with just a quarter of those who anticipate retiring before 65 (27%).

Willingness to pay for superior retirement benefits crosses all age groups, with 71% of Boomers, 65% of Gen X and 56% of Gen Y reporting that they would be willing to pay a higher amount out of their pay each month to ensure a guaranteed retirement benefit.

Two-thirds of Canadian employees (67%) would rather receive a guaranteed pension for life than a fund to invest, but which might run out (20%).

Even though a majority of Canadians expect to retire by age 65, almost two-fifths (38%) believe there is more than a 50% chance they will need to work until age 70.

74% of survey respondents believe they will have a less comfortable retirement than their parent’s generation.

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