You’re not as old as you think so stop that retirement talk

Garry Marr | 24.Jul.2013 – Financial Post
The C.D. Howe Institute says 65 is the new 60, so maybe it’s time we all stop dreaming about retiring early.
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We index everything else to inflation, it makes sense that the think-tank has essentially done that for aging, taking the age of Canadians in 1950 and translating it into 2010 terms.

“It’s clear people are going to work longer for the simple reason that they are younger today than they were in 1950,” says Marcel Boyer, one of the authors of the study which says that the 65-year-old from six decades ago is actually 59.5 years old in 2010 terms.

The thinking has the potential to change our views on everything and not just retirement. A person shouldn’t feel cheated compared to past generations, if they are working longer in exchange for a longer lifespan.

Maybe more of our assumptions should change. If a 35-year-old is like a 26.8-year-old, according to the study, who wants to have kids in their early 20s — that’s like being a teenage bride.

Maybe getting out of university in your mid-twenties is okay too. The survey doesn’t go back to being 25 but that has to be like being a teenager in 1950 terms.

And what about all the debt? Perhaps we have longer to pay it off than previously thought. Ottawa reduced amortization lengths on government-backed mortgages from 30 years to 25 years last year but why the panic if we’ve got all this time to pay them off?

C.D. Howe suggests we rethink our concept of age, instead of measuring years from birth, they say we should measure years to death.

Researchers arrived at the real-1950 age by finding the difference between life expectancy in 1950s and life expectancies in 1970 and 2010. It then subtracted the number from the nominal age in 1970 and 2010 to obtain the real-1950 age for multiple categories.

Canadians seem to have gotten the message. A Sun Life Financial Canada poll in 2012 among those 30 to 65, found just 27% expect to be fully retired at 66. The percentage was down from 51% in 2008.

Perhaps that’s why there wasn’t much of an uproar when Ottawa announced in 2012 it was increasing the eligibility for Old Age Security and Guaranteed Income Supplement from to 67 from 65, over six years starting in April 2023.

“It’s really a question of perspective. Are you old at 65?,” said Mr. Boyer, adding longer lives are changing thinking. “All kinds of policies have to be put into question.”
If people were working until 65, then today maybe they should be expecting to be working until they are 72

Toronto-Dominion Bank chief economist Craig Alexander says it’s not just longer lives but healthier lives, leaving many Canadians with the capacity to stay in the workforce longer.

“[Working] can take some of the pressure off retirement,” he says, adding he thinks the word retirement has changed to the point where it just means someone has left a long-term employer. “I meet a lot of retirees who are actually still working.”

He divides Canadians into three camps of retirees. There are those who can’t afford to retire, some who choose to stay in the labor market for stimulation and interaction and then the people who actually leave the workforce altogether.

Mr. Alexander said the worry is for retirees who have jobs that require physical ability and still need to work and those who experience illness in their later years.

Certified financial planner Ted Rechtshaffen, president of TriDelta Financial, says the ability to work longer is important but employment stability is also not what it was in the 1950s.

“Most people will experience some period of unemployment,” said Mr. Rechtshaffen, who has stretched his financial plans to 95 from 90 over the last decade.

Still, when you you add it all up, our golden years look a lot better than our parents’ retirement or grandparents’. Fred Vettese, chief actuary at Morneau Shepell, has noted the ratio of working years to retirement years was five to one 60 years ago. It’s now 1: 1 in the pubic sector and 1.5: 1 in the private sector.

That’s a pretty good deal. Enjoy it and don’t complain about working longer because you’re not. And, remember, you’re younger than you think.