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- Report suggests actions for each generation and how
retirement plan providers, plan sponsors and advisors can help
achieve better outcomes
- With longer lives and potentially more years in retirement,
action during working years is crucial
TORONTO, Oct. 22,
2024 /CNW/ - Today, Manulife released the
Manulife Financial Resilience and Longevity Report,
incorporating data from its fourth annual survey of Canadian
retirement plan members and a separate panel of Canadian retirees.
The report shows how workers continue to face financial challenges,
with Baby Boomers generally in a better financial position compared
to Gen Xers and Gen Z/Millennials. Retiree experiences differ quite
significantly depending on how/when respondents retired – as
planned or earlier than expected.
Against a backdrop of longer life expectancy, and potentially
more years to fund in retirement, the report explores what can be
done to improve financial resilience when working, possibly
enabling people to save more for retirement.
"All over the world, people are living longer. While we used to
count retirement in years, now, many of us can look forward to
counting it in decades," said Aimee
DeCamillo, Global Head of Retirement, Manulife Investment
Management. "With life expectancy over 80, Canadians must now plan
for how they'll live and fund two or even three decades, of
retirement. This year's report brings additional clarity to help
members save, stay invested, and transition into retirement."
The report suggests that the age at which a worker plans to
retire (their target retirement age) depends partly on the
financial resilience they're able to achieve during their working
years. It refers to financial resilience as the ability to navigate
financial obstacles such as debt, college costs, healthcare
expenses, and emergencies. Workers struggling to meet their current
financial needs often struggle to build this resilience and tend to
delay saving for retirement.
Additionally, the target retirement age is a fundamental factor
in managing a longer retirement. While workers often have an age in
mind, many end up retiring earlier than planned. The survey showed
that nearly half (47%) of retirees left the workforce sooner than
expected, shortening their savings period, and extending their
retirement years.
Additional findings from the Manulife Financial Resilience
and Longevity Report include:
Personal finances remain strained
Despite improvements in the economy since Manulife's last
retirement survey, released in April
2023, workers are still nearly twice as likely to describe
their finances as fair or poor (41%) as they are to call them very
good or excellent (19%). More than half consider their level of
debt to be a problem, but only about a third (32%) are concerned
about their emergency savings.
Out of the generations, Gen X had the highest number of
respondents report they had a poor/fair financial situation (44%)
and that debt is a problem (60%). Although Baby Boomers are least
likely to describe their financial situation as fair or poor, a
third (33%) do feel this way.
Retirement preparation is behind
Half of workers report being behind in their retirement savings,
1 in 3 don't know where they stand and 34% say they worry about not
having enough retirement savings. Only a third (33%) have completed
a formal and comprehensive retirement plan and 41% have a financial
advisor. Despite Baby Boomers being most likely to feel their
retirement savings are on track, 42% of respondents in that
generation say they're behind.
On average, workers expect to retire 5 years later than they'd
like to, most commonly so they can continue to work to increase
retirement savings or pay off debt. While half of the respondents
make saving for retirement a priority, 2 in 5 say they would be
saving more if they could better manage their finances. Gen
Z/Millennials and Gen X are more likely than Baby Boomers to say
managing their financial priorities is getting in the way of saving
for retirement.
Workers with an advisor or a formal retirement plan report
better financial situations and increased retirement
readiness
The survey found that nearly three-quarters of respondents who
worked with an advisor reported they were in a good financial
situation, while only about half of those who didn't have an
advisor considered themselves to be in a good financial situation.
As well, 77% of respondents who had a comprehensive retirement plan
felt they were in a good financial situation, but of those who did
not have a comprehensive retirement plan, only 51% reported being
in a good financial situation.
Similarly, a higher percentage of workers with an advisor
reported being on track for retirement savings than the percentage
for those who did not work with one: 42% compared to 33%. And,
about half of respondents with a formal retirement plan felt they
were on track with their retirement savings compared to only 29
percent of those who did not have a financial plan for
retirement.
Employers can help by providing financial wellness programs
that provide retirement planning support and access to
advisors
In the survey, workers said they are interested in financial
management support, especially advisor consultation, but they don't
want this to come at a cost.
The survey showed that overall current usage of advice sources
for retirement planning and investments generally increases with
age, though overall interest in seeking advice is consistent across
all age groups, demonstrating an opportunity to better meet younger
Canadians' needs.
Over half of Canadian workers said they wouldn't use sources for
financial planning and advice if there were an associated cost.
In-person consultation was seen as the most valuable, with 1 in 3
saying they would be willing to pay for it.
"As a leading Canadian provider of retirement plans, we embrace
the role we can play in helping employers improve savings outcomes
of their employees. An effective financial wellness program,
comprehensive savings plans, combined with a suite of digital
resources and an engagement model that reaches members in a
personalized manner in the way that best works for them may be the
formula for retirement readiness," said Brett Marchand, SVP, Manulife Group
Retirement.
Retirement is generally going well, but retiring before
expected can create financial challenges
Canadian retirees reported enjoying this stage of their lives
and pursing unexplored passions. Nearly six in ten (56%) say
retirement has given them an opportunity to pursue passions they
didn't have time for before. A quarter say their social circles
have grown.
Retirees with a financial advisor and those who had a retirement
plan are more likely to be focusing on health, enjoying hobbies and
travelling. Retirees with debt and those providing financial
support to others are more likely to be working in retirement.
The survey showed that Canadians who retired as planned or later
seem to have a significantly more positive outlook on their
financial situation and resilience than those who retired early.
Their preparedness may be a key driver of this optimism. The
majority had a formal plan in place before retiring, and more than
half work with a financial professional.
However, nearly half (47%) of retirees surveyed left the
workforce earlier than expected, at age 59 on average, and are
facing more financial challenges compared to retirees who were able
to retire as planned or later. Almost one in four early retirees
considers their debt a problem. More than half of these "early
retirees" wished they saved more before retiring and many are
making lifestyle adjustments to cut down living costs.
"The survey certainly highlights the power of preparedness,"
said Mr. Marchand. "With increasing longevity and potentially more
time spent in retirement, it's critical we do all we can to help
people increase their financial resilience and save while they're
working."
Methodology
This year's online survey was conducted in English and French and
comprised of two participant samples sourced through Angus Reid's research panel: Canadian employees
and Canadian retirees. The Canadian employee sample comprised of
1,572 Canadians, aged 18 and up, employed, and contributing to an
employer-sponsored retirement plan. The survey for this sample was
conducted from May 9th,
2024, to May 29th, 2024,
with an average survey length of approximately 15 minutes per
respondent. The Canadian retiree sample comprised of 523 retired
Canadians. The survey for this sample was conducted from
May 9th, 2024, to
June 3rd, 2024, with an
average survey length of approximately 14 minutes per respondent.
All statistical testing is done at 0.95 significance levels.
Percentages in the tables and charts may not total 100 due to
rounding and/or categories not included. The 2024 financial
resilience and longevity survey was commissioned by Manulife and
John Hancock Retirement and conducted by Edelman DXI. Manulife is
not affiliated with Edelman DXI and neither is responsible for the
liabilities of the other. The commentary in this publication is for
general information only and should not be considered legal,
financial, or tax advice to any party. Individuals should seek the
advice of professionals to ensure that any action taken with
respect to this information is appropriate to their specific
situation.
About Manulife Investment Management
Manulife
Investment Management is the brand for the global wealth and asset
management segment of Manulife Financial Corporation. Our mission
is to make decisions easier and lives better by empowering
investors for a better tomorrow. Serving more than 19 million
individuals, institutions, and retirement plan members, we believe
our global reach, complementary businesses, and the strength of our
parent company position us to help investors capitalize on today's
emerging global trends. We provide our clients access to public and
private investment solutions across equities, fixed income,
multi-asset, alternative, and sustainability-linked strategies,
such as natural capital, to help them make more informed financial
decisions and achieve their investment objectives. Not all
offerings are available in all jurisdictions. For additional
information, please visit manulifeim.com.
About Manulife
Manulife Financial Corporation is a
leading international financial services provider, helping people
make their decisions easier and lives better. With our global
headquarters in Toronto, Canada,
we provide financial advice and insurance, operating as Manulife
across Canada, Asia, and Europe, and primarily as John Hancock in the
United States. Through Manulife Investment Management, the
global brand for our Global Wealth and Asset Management segment, we
serve individuals, institutions, and retirement plan members
worldwide. At the end of 2023, we had more than 38,000 employees,
over 98,000 agents, and thousands of distribution partners, serving
over 35 million customers. We trade as 'MFC' on the Toronto, New
York, and the Philippine stock exchanges, and under '945' in
Hong Kong. Not all offerings are
available in all jurisdictions. For additional information, please
visit manulife.com.
SOURCE Manulife