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Why are So Many Retirees Choosing to Work?

27 August 2012

In the recent labour talks between the Ontario teachers and Ontario’s Ministry of Education, one of the proposals is to reduce the amount of days a retired teacher can fill in as substitute. This, states the proposal, will give younger teachers a chance for more work opportunities. And while this may be one of many issues within the labour disputes, and one that’s not the most talked about, it’s shed some light on a very interesting phenomenon happening in the country right now. That is the amount of retirees that are choosing to work even after they’ve entered retirement.

The setup, aside from the fact that they’re working at a time when they’re supposed to be enjoying life, is simple for retirees. You can work up to six months minus one day in Canada if you’re 65 or over, and still collect your pensions cheque. It’s a means of making a supplementary income in addition to the pension that so many retirees find just isn’t enough to deal with daily costs and living expenses. And, as you can see from the chart below, it’s something that a lot of Canadian retirees are doing.

It was a recent survey done for CIBC by Leger Marketing that showed just how many retired Canadians are planning on working into their retirement years. The survey polled Canadians that are currently in their 50s; and the results showed that over half, 53 per cent, plan to work past retirement.

Of that 53 per cent Atlantic Canada, Ontario, Alberta, and B.C. were the closes to the national average, with Quebec seeing the least amount of respondents at 47 respondents saying they’d be working well into their 60s. Still, that’s nearly half. Not really the retirement picture so many of us have in minds for ourselves.

So then, why are so many choosing to do so? In fact for many, there’s no choice about it.

The CIBC survey also showed that people simply don’t have enough money saved up for retirement. And it’s no secret that pensions are often very hard to live off of. The poll showed that nearly half of Canadians in their 50s have less than $100,000 saved up for their retirement years. This falls in line with recent talk about how retirees carry a fair amount of debt, and how the majority of retirees don’t make extra payments towards that debt (results shown in graph below.) All of this combined makes working through the Golden Years a necessity, rather than a choice.

“The retirement landscape is shifting as Baby Boomers reach traditional retirement age with a smaller nest egg than they expected to have,” said Christine Kramer, executive vice-president of retail distribution and channel strategy at CIBC. “Many Canadians are now planning to draw on multiple sources of income including employment to fund their retirement.”

Add in to that the fact that just like in all the other decades of one’s life, unforeseen events come up in retirement. Things like divorce, death, illness, and other circumstances that while beyond one’s control, still all cost a lot of money. And typically, pensions just aren’t enough to cover these events.

But it’s not always just money that keeps people working through retirement. The CIBC survey also showed that just one-third of people who are going to work in retirement are going to do so only for the money. The other two-thirds, 67 per cent, said that they planned on continuing work either as a way to stay socially active, or because they wanted to remain an active part of the workforce.

That’s also not surprising considering that people are simply living longer than they once did. And they want to do things and be active during those years. And why not? They’re healthy, they’re happy, and they still have plenty to offer to the workforce.

The problem is, does the workforce want them? Some say that higher wages go to retirees, because they simply have more experience and more know-how than rookies just entering their field. And the Ministry of Education’s proposal to limit their time in the workforce certainly seems to reflect that. And then there’s the far-fetched notion that because employers pay higher wages to those higher-aged employees, the prices on their products and services goes up.

But are retirees staying in, or returning to, the workforce really such a bad thing?

Not necessarily. The fact that prices would go up simply because retirees are working somewhere is something that simply can’t be proven, and seems a little misguided. And having all that experience and knowledge in our workforce is always a good thing – especially if you’re the consumer on the receiving end of it. But for those looking for real, bottom-line reasons why retirees remaining in the workforce is a good thing, it comes down to one thing. Those people have more money.

That money is needed to help keep our economy churning. And when people, retirees or otherwise, are active in the workforce, they have more of it and can offer more support to that economy. Whatever their reasons for choosing to work in their Golden Years, the simple fact of the matter is that it’s better for everyone if they do.

And while concessions perhaps should still be made to ensure equal opportunity for all – young and old alike – more people are planning on working through their retirement. And that’s probably not a bad thing.

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