Manulife Retirement Report Highlights Generational Preparedness and Financial Resilience as Longevity Increases
Report suggests actions for each generation and how retirement plan providers, plan sponsors and advisors can help them work towards better outcomes
With longer lives and potentially more years in retirement, action during working years is crucial
October 22, 2024
Toronto – 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 Reportinclude:
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.
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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.
