43% of Canadians are delaying retirement due to financial pressures — is your plan still realistic at age 63?

Many people look forward to retirement and can't wait to kick off that chapter in life. But for some people, that part of the story isn't appealing.

If you're 63, you're at a time when it is reasonable to consider your financial stability during retirement. Even though you haven’t hit 65, you're still old enough to collect the Canada Pension Plan (CPP) benefit, although you'll be looking at a reduced monthly sum since each year you delay, until age 70, the more you'll earn.

If you have a decent amount of savings or a pension, you could retire at 63 or shortly thereafter without worry. But it's not just the financials you'll need to think about. There's your mental health and loneliness to consider — aspects of retirement that should not be overlooked.

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Forever young

It's easy to imagine retirement as being carefree. However, the hard truth is that retirement has the potential to be unfulfilling.

In a 2024 Statistics Canada survey, 61.5% of Canadian aged 65 and older described themselves as satisfied with their lives, compared to 48% for those under 65. However, StatsCan also estimates that between 19% and 24% of those aged 65 and up feel isolated from others, wishing that they could participate in more social activities, illustrating how isolating retirement can be without the community a career may bring to someone.

There's also the feeling of purpose. Many find that their identities are tied to their jobs, so when they retire a part of themselves disappears. StatsCan found that of all working Canadians aged 65 to 74, 21% were employed in 2022, with 9% doing so by necessity and 12% doing so by choice.

A work schedule also provides structure. In the absence of habit, it’s easy for retirees to shut themselves in their homes, thereby adding to their isolation and boredom.

That’s why experts argue it’s smart to avoid sunsetting a career. Aside from the financial stress and a lack of a steady income, the mental and emotional toll can make retirement unpleasant, even when money isn’t a concern.

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Inflation, scarcity and how to invest

Although some might delay retirement due to social or emotional concerns, many delay retirement due to financial woes.

CPP Investments reported that 61% of Canadians worry more about running out of money during their retirement. Delaying retirement allows them to boost their savings and leave their nest egg untapped.

That same CPP Investments survey reveals how high cost of living due to inflation have Canadians concerned about their savings.

Given that CPP benefits only make up about 33% of a person's pre-retirement income, it’s easy to see why many of them would opt to postpone retirement and keep plugging away at their jobs in order to get ahead of economic hurdles.

There's also a general lack of savings to consider. A 2023 Healthcare of Ontario Pension Plan (HOOPP) survey found that 44% of working Canadians have not set aside money for retirement that year, with 32% never having set aside money for retirement at all. Delaying CPP boosts monthly benefits by 8.4% per month for each year until 70. But it’s hard to stave off CPP when you don’t have a paycheque.

Some steps can help alleviate the financial burdens that cause Canadians to delay retirement. Boosting savings can address scarcity fears, as can working with a financial advisor to establish a safe withdrawal rate.

Investing strategically can help combat those inflation fears. A portfolio of income-producing assets like bonds and dividends can help retirees keep up with inflation, even when it’s higher than usual.

Stick to your vision

Retirement doesn't just have financial implications, it can have an emotional impact. One of the best ways to stave off existential dread is to figure out what you want to do with your life after work.

Maybe you’d like to volunteer for a charitable organization, or maybe you’d like to move closer to your adult children to help take care of your grandkids. The key is to stick to your vision and keep yourself occupied.

Having a support network is also important. Before retirement, see what community resources are available to you, whether through a senior centre or a place of worship. If you can’t find one within your vicinity, you may want to consider moving to a senior community that can nurture your social needs, if you can afford it.

One final thing to consider cutting your hours of work back through a part-time job or consulting position; maintain some semblance of a work schedule for as long as your body can handle it. You get the best of everything: time to yourself, an opportunity to get out, socialize and earn a paycheck to alleviate your financial stress.

Sources

1. Statistics Canada: The older people are all right (Sept 24, 2024)

2. Statistics Canada: Employment by choice and necessity among Canadian-born and immigrant seniors (Apr 24, 2024)

3. Healthcare of Ontario Pension Plan: 2023 Canadian Retirement Survey