Has the pandemic changed Canadians’ retirement plans?

By Anne Levy-Ward
The pandemic has turned Canadians’ retirement plans upside down. Some changes are for the better, others… not so much.

For many Canadians, COVID-19 has impacted retirement plans – but unexpectedly, these impacts are sometimes beneficial.

Are you approaching 60 and thinking about retirement? Let’s take a look at the pros and cons of retiring during a pandemic.

Should I retire despite the pandemic?
Let’s be optimistic and start with the good. It may be time to end your career for five reasons:

1. Psychologically, you may already be there.
   Before the pandemic, retirement rhymed with disruption of daily life and social interactions. However, these long months of telework will probably make the transition easier for you. You have already left the six o’clock alarm clock, the tailor and the morning traffic jams behind. And thanks to technology, your interactions with your colleagues have diminished or disappeared. After all, are you really going to be like, “Ah, I’m going to miss those Zoom calls?”
2. You may have more savings.
   If you’ve been able to work from home, you’ve probably accumulated some pennies. All that money you haven’t spent on transportation, dry cleaning, restaurant lunches,… coffee lattes? According to recent research, almost half of Canadians saved more during the pandemic than average*. The more you have saved, the sooner you can retire.
3. You could spend less in retirement.
   Did your dream retirement include a trip worldwide, a vacation home in the southern sun, or a cruise a year? COVID obliges it is necessary to review specific projects, even all. Many people want to be closer to their families in retirement. Staying close to home will cost you less than crisscrossing the planet.
4. Retirement could be less stressful than returning to work.
   You’ve been working in your slippers this whole time and have limited your interactions with strangers. Imagine the return to the office: all these people, in crowded buses or trains. Ouch! Does it seem too stressful to you? If retirement has already tempted you before, it may be time to take the plunge.
5. It would be interesting to get away from the city.
   Many people hope to finance their retirement with the value of their homes. In other words, you have to think of a smaller house or a corner where life is less expensive. However, big, crowded cities are less appealing these days than they once were. A smaller, less crowded community could provide you with a better quality of life. However, keep in mind that the financial advantages of moving to a smaller city are also less than in the past. The others are also thinking of moving. The demand created by teleworkers and retirees has driven up house prices in the most desirable small towns. They are now reaching unprecedented heights. The value of your home could therefore be much lower than expected.

What are the negative impacts of the pandemic on my retirement plans?
The pandemic has had two significant negative consequences on pension plans:

1. You may have saved less money than expected.
   Perhaps you lost your job permanently or temporarily during the pandemic. So you may not have been able to maintain all of your contributions (CPP, workplace plan, RRSP, TFSA). Research has shown that more Canadians than average were unable to save for their retirement last year compared to the year before*. Here is what the Canadian Institute of Actuaries (CIA) reported recently:

The pandemic has changed the planned retirement dates of almost 1 in 4 respondents.
Of this sample, 69% of respondents said they had to work longer because they would need this cash flow.
This setback could well push your retirement date much later than expected.

Are you on track to reach your retirement goals?
Use this free retirement savings calculator to find out.

2. You might have to spend more.
   It’s a fact: the older you get, the more care you need. Many people move into long-term care facilities or nursing homes when their spouses or children cannot care for them. It can be an affordable solution if the government can cap the costs or subsidy if needed.

However, the pandemic has revealed that even the best establishments have serious problems. As a result, according to the ICA, 63% of Canadians have had a deteriorated vision of residences for the elderly since the pandemic. Many of them, therefore, prefer to stay in their own homes.

If you are interested in this option, you should think about saving a little more to receive care.