A startling new survey from Manulife Group Retirement reveals that Canadian retirement plans are being upended by unexpected circumstances, forcing many workers into early retirement they're financially unprepared to handle.
The Unplanned Retirement Crisis
According to the November 2023 survey, almost half of Canadian retirees left the workforce earlier than planned, with the average early retirement age being just 59 years old. The majority of these premature retirements weren't by choice but resulted from circumstances beyond their control.
"I was in good health until I wasn't," one survey respondent commented. "Retirement comes faster than you think." The data confirms this sentiment, showing that health issues, caregiving responsibilities for loved ones, and job loss were the primary drivers forcing Canadians into early retirement.
Longevity Creates New Financial Challenges
Compounding the problem of early retirement is increasing life expectancy. Since 2023, life expectancy in Canada has risen to 83 years, and the number of centenarians has doubled since 2001. Globally, the population of people over 100 is projected to grow by 800% by 2050.
This demographic shift means today's workers could face retirement periods spanning 40 years or more, dramatically longer than the 20-30 year retirements previous generations experienced.
"Longevity is rewriting the rules of retirement, and as it increases, we're seeing more plan members questioning whether their saving and investment strategies will sustain them throughout retirement," said Aimee DeCamillo, global head of retirement and wealth at Manulife Wealth & Asset Management.
Financial Preparedness Gap Widens
The survey uncovered concerning gaps in retirement readiness. Only 15% of early retirees left work because they had saved enough to support their retirement lifestyle. This preparedness gap has widened amid growing financial pressures.
Since the pandemic, the percentage of working Canadians rating their financial situation as fair or poor has jumped from 33% in 2020 to 41% today. Similarly, those who consider their retirement savings behind schedule has increased from 35% in 2021 to 48%.
Many retirees in the study expressed surprise at how expensive retirement proved to be and how quickly they were depleting their savings. The combination of high living costs and heavy debt loads has made working longer an increasingly popular strategy.
The survey found that the percentage of working Canadians who want to retire later has climbed from 26% in 2020 to 35% today. In Manulife's global study, 40-50% of workers across all markets indicated they planned to work during retirement.
However, the North American reality paints a different picture. Only 16% of retirees surveyed actually work full or part-time, with most stopping work far earlier than planned due to health challenges or caregiving needs.
