While this column is called “Retired Money,” a recent encounter with a group of seniors reminded me that once you reach retirement, there’s a lot more to it than just money. This hit home just before Christmas when I attended a Seniors Luncheon hosted by our local church in Toronto.
I ended up at a table mostly of men, aged 82 to 90 and nearby was my female friend Meta, who had just turned 100. We didn’t talk explicitly about money but it was apparent that the men had all been senior executives, accountants or teachers and enjoyed relatively plush employer-sponsored pension plans.
In the case of 88-year old Larry (a slightly altered name for this column), he had been forced to retire from a government job at 65, because that was the way it was back then. He didn’t want to retire that early but had no choice and he knew even before it happened that he would not relish the change. Even so, he jumped into volunteering almost from the start, and remained physically active: running every day until various ailments forced him switch to walking. He plays a lot of bridge and even more poker, the latter for small sums of money. But if he had the option, he would have continued to work at least a few more years, he told me.
Another man we’ll call Kevin was a former teacher who retired at 58, and unfortunately suffered the loss of his wife soon after. He’s now 82 and takes medication for depression and told me frankly that he had retired “too soon.” I asked why he did so and he replied that he had a great pension. But as he soon discovered, retirement is not just about the money: it was about social interaction, mental challenge, routine and structure and a feeling of being useful and one’s life having meaning. For him, the double loss of a career and life partner were devastating. In retrospect, extending his career would have softened the blow of his bereavement.
There was a couple at our table we’ll call Jean and Bob, both in their late 80s and married for 60 years. This couple had brought five children into the world but Jean wasn’t ready for the fact that once he retired, Bob would be in the house with her 24/7. I could relate to this since, while at best semi-retired myself (at 63) and working from home, my wife still works full-time at a traditional corporate office. I tell her there’s probably no hurry for her to follow suit and work from home too. Having done so earlier in her career, she seems to agree.
Then there’s Meta (her real name, used with her permission), who until a recent mishap with her hip, had been going to work at a nearby print shop for one or two half-days a week. Now that the furor over her 100th birthday is dying down, she says she wants to go back to work: again, not so much for the money but because of the break in her routine, and the friends she has made there. Mind you, she adds, the extra bit of spending money can come in handy too!
For me, this luncheon was a sneak preview of what lies ahead for most of us. It reinforced my personal conviction (also expressed in the book mentioned in the author blurb below) that there’s really no hurry to leave the workforce and “retire” full-time, no matter how rosy a picture the financial industry’s depiction of “full-stop” retirement is.
Now it’s true that my elderly church friends were perhaps more financially secure than the generation coming up after it, because most of them enjoyed Defined Benefit plans that are becoming increasingly rare. Many of these couples, like Jean and Bob, could get by on the salary of a single breadwinner during the working years, and a DB pension and two sets of Government-provided CPP and OAS similarly should sustain them in retirement.
I know some Baby Boomer couples in a similar position, often teachers or Government workers with two DB pensions, and they are—to use the vernacular—“laughing,” easily able to leave full-time work by their late 50s or early 60s.
But it’s quite different for even dual-income couples in the private sector. Financially speaking, the lack of DB pensions is supposedly offset by large self-managed RRSPs. However, variable stock market returns coupled with very low interest rates argues in favor of working just a few years more, if it can be managed.
Add to this higher expected life expectancy, and the case for working at least part time in what used to be called the retirement years is that much stronger. We covered this in an earlier edition of Retired Money (see “Should you work part-time in Retirement?”) And it bears repeating that if finances ARE a concern for you, then delaying the receipt of the Canada Pension Plan and Old Age Security to age 70 can bring substantially higher levels of income once you’re ready to receive it: inflation-indexed guaranteed income that may be the closest many Baby Boomers come to a true employer-sponsored DB pension.
The same logic goes for those who are in Defined Contribution plans or whose retirement savings are mostly self-directed in RRSPs, TFSAs and non-registered investments. The longer you let your investments compound tax-free, and the fewer years you draw down on those investments, the more financial security you’ll ultimately have.
Based on what I learned at the Seniors luncheon, if you’re thinking of other things than money in your golden years, you probably have enough financial security. If you’re still worried about outliving your money, I’d postpone leaving a full-time job for a few more years. When you do think it’s time to slow down, consider at least transitioning to semi-retirement and perhaps an encore career that lets you combine part-time work, higher education and volunteering in various combinations.