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:
- 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 going to be like, “Ah, I’m going to miss those Zoom calls?” - 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. - 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. - 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. - 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 less advantageous than expected.
What are the negative impacts of the pandemic on my retirement plans?
Need help deciding on retirement? Find advice.
An advisor can help you decide when you can afford to retire. He can also advise you on how to spend your savings. This way, you will be able to:
reduce your taxes;
make your money last as long as needed;
leave some money for your children or a charity, if you want.
It is now possible to consult most advisors by videoconference. Speak to an advisor today.
*Source: Canadian Retirement Survey, Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data, 2021.
This article is intended to provide general information only. SunLife Assurance Company of Canada does not provide legal, accounting, tax or other professional advice. If necessary, please consult a specialized professional who will conduct an in-depth examination of your legal, accounting and tax situation.
