Chapter 4
Retirement expectations

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Timing of Retirement

Of those older workers who were currently working and never retired (roughly 78% of the Survey of Older Workers (SOW) sample), the majority of those with a specific retirement age in mind (88%) planned to exit their current careers by age 65. But when asked if they planned to retire completely, over half (54%) indicated plans to continue working part-time. A more modest 3% indicated a desire to find full time employment after their "retirement".

Chart 4.1 Age of planned retirement from current job and labour force

Chart 4.1 illustrates the planned retirement age of older workers currently in the labour force both from their current job, and, presumably from the labour force. It is interesting to note the clustering of ages, reflecting, some shared notions of when retirement is most appropriate. Occurring every five years, these clusters peak at age 65, the age when Canadians can first access their unreduced Public Pension.¹

The largest proportion of the population who were either currently or previously retired had retired for the first time between the ages of 55 and 59. The vast majority (81%) had retired on a voluntary basis. Eighty-three percent (83%) of all currently retired respondents had never returned to work since their retirement and of that group, only 4% had tried to find employment.

Incentives to working longer

Offering such arrangements as working part-time, working from home, working flexible hours as well as the ability to collect one's workplace pension while remaining at work could significantly increase an employers' ability to retain the skills and abilities of their older workers for longer than originally anticipated. Looking at the chart below we observe that with the exception of some part-time work arrangements, many older workers are not currently offered the above-mentioned alternative work options. Also noticeable is the fact that, should they so desire, there is much that employers can do to entice their workers to remain in the workforce longer than originally planned. For instance, while only 12% of older workers are provided the option to work at home, 35% of older workers would welcome such a program and indicated that they would remain in the workforce longer should it be offered. Likewise, 38% of older workers indicated that they would work longer if they would be allowed to collect their pension as well as a wage but only 20% of employers offer the option. Perhaps the most established program, the availability of working part-time, is also the most popular option from an employer's point of view (half of employers offer this option), and employees with 47% of older workers indicating that they would consider working longer if offered such an option.

Chart 4.2 Percentage of employers offering flexible work arrangements and percent of older workers who would use them

Reasons for retirement

The SOW provides a direct measure related to the reasons for retirement. This resulted in a list of key imperatives affecting retirement. The question was only asked of respondents who had previously retired or were presently retired (roughly 16% of the SOW sample) and included a catch all "Other – specify" for the diverse reasons that could not be coded to a major category. As a "mark all that applies" type question, a respondent was allowed more than one answer. For this reason, if more than one reason was mentioned, a second question was asked that probed which of those mentioned was the most important reason in their decision to retire. If only one answer was provided, it was assumed to be the most important.

Chart 4.3 Most important reason for first retirement - retired or previously retired older workers

As illustrated above in Chart 4.3, of those who were currently or had previously retired, financial readiness was the single most important reason for retirement. It is particularly evident when one digs into the second most popular category, the "other reasons", that, for many, some form of readiness is central to the decision to retire. In this category are found a host of reasons, the major constituents are provided in Table 4.1. It is important to note that this was an open-ended question and only the five reasons presented in Chart 4.3 were provided for on-site coding by the interviewer. If the interviewer could not decisively place the respondents answer into one of these categories, they entered them as "Other" and wrote in the verbatim response. Some of these (24) were subsequently recoded into the existing five, but others (449 responses) required post-collection coding. The major categories for this coding are presented below, while none of the categories support independent analysis (which is why they remain agglomerated in the "Other" category), it is interesting to note the split between what one might term voluntary reasons for retirement, such as "Pension maxed out / Required years attained, Offered severance package, Fed up / Wanted change, Able to sell, Spend more time with family, Pursue other hobbies, Wish /Desire" and involuntary ones such as "Mandatory retirement, Job too tiring /stressful, Discrimination / Pressure to retire, Conflict with boss / co-workers, Organizational changes, Health of parents, Spouse's wish or Market slowdown". Albeit unweighted, the split is almost 70 to 30 in favour of a "voluntary" exit.

Table 4.1 Unweighted distribution of other / specify responses - most important reason for first retirement

Returning to Chart 4.3, most of the remaining reasons for retirement do not allow the same latitude in interpretations. Plant closure, layoffs and downsizing, particularly for an older worker unable or unwilling to relocate and start at the bottom with a new firm in their "career" job, such an event could rationally lead to an earlier retirement than anticipated, but it cannot be said to be voluntary. Likewise, personal health or the health of one's partner is an event outside of individual control that may indeed force an otherwise distant decision. The final reason, "Lack of job satisfaction", is perhaps the most ambivalent, it may be a bitter-sweet voluntary retirement than can either be entirely avoided or at the least delayed by some timely employer interventions.

It is important to reiterate that, as with all information in this report, the distribution of "reasons for retirement" are only representative of older workers, thus, these are people aged 50 to 75 who had worked in the previous two years and it excludes a large portion of retirees in this age cohort who have been retired for more than 2 years and who likely have a different profile of reasons.

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Note:

1. The other peaks likewise rest on similar programs. For instance, 50-59: only eligible for some private pension benefits and CPP disability, 60-64: also eligible for partial CPP retirement benefits; 65-69: eligible for full CPP benefits, OAS and GIS; 70+ : eligible for all other benefits and mandatory RRIF conversion.