Canadians are working longer, having to delay retirement, and the trend is increasing according to results just released by Statistics Canada. For many, high debt levels going into retirement may be the cause.
In 2009, a 50-year-old worker expected to retire at the age of 66. In 1997 the expected retirement age was 63. Canadian workers have in effect been delaying their retirement. While the recent analysis by Statistics Canada looked at factors such as forced retirement due to illness or job loss and the impact of part-time employment, the bottom line may just be that more seniors are working longer because they have to.
Why are Canadians working longer?
Seniors are piling on debt faster than any other age group and paying off this debt cuts into their standard of living in retirement. Whether this debt is coming as a result of wanting a better lifestyle or relying on credit to make ends meet, the end result is that Canadians may be working longer because they cannot afford to retire. The number of seniors with high levels of debt is growing putting added pressure on older Canadians to work longer in order to pay off debt.
Many seniors are pushed into retirement due to an illness or job loss. In fact, involuntary retirement accounts for about one-quarter of total retirements in Canada. Making ends meet on a reduced pension when you are trying to pay off debt is especially difficult.
You would think that the recent economic downturn with its resulting plant closures and job losses would have slowed the increase in retirement age. Actually no. Even when involuntary retirement due to illness and job loss were taken into account, Canadians are still retiring later and working longer. Many seniors have been forced to take on part-time work during their retirement years in order to make ends meet and this trend partially accounts for the increase in retirement age.
Reduce Your Debt Early
The lesson from all this should be to work towards paying off your debt long before you plan to retire. The more you owe, the more more of your pension income you will use up to cover debt payments. The more you owe later in life, the longer you will be forced to work rather than doing so because you choose to. Develop a plan to reduce your debt today and if you need help, get that help early.