This is especially true for women, who were found to be more severely affected by employment losses than their male counterparts one year into the pandemic, according to Statistics Canada (StatCan) research.

As the impact of COVID-19 lessens day-to-day, the job market is rebounding from what’s been called The Great Resignation or the Big Quit.

You probably know someone who switched jobs or industries (if you haven’t done so yourself). Or started a home-based business. Or took time off to care for family. Or said, “I’m done with all this,” and retired early.

While the pandemic shook up our lives, it also prompted a reality check on retirement plans, as in: “how soon can I afford to retire?”

Seize the day but think about the future

Any major life event can trigger a sudden change in retirement plans: an unexpected layoff, the death of a spouse or partner, receiving an inheritance, or a much-needed change to resist burnout and take care of mental health. 

A dynamic approach to retirement planning can help protect your income and lifestyle, even if things don't go exactly as planned, says Amélie Laferrière, Director, Wealth Sales, at Sun Life Global Investments.

“It’s important to add the ‘what if’ to a retirement plan so that no matter what life event happens, it’s been factored into the possible outcomes,” says Laferrière.

This can also factor in how your ideas about retirement might change over time. For couples, it’s important to understand each other’s view to plan effectively together.

“Discussing with your significant other how they envision life in retirement is important to do before you get there. Some of us may be surprised that we see life in retirement very differently,” says Laferrière.

“'Can I afford to retire' is a big question that depends on many factors: how much have you saved; how much will you spend; and are you willing to make compromises?”

Canadians rejig retirement plans for now—sort of

One in four Canadians reported shifting retirement timelines directly because of the pandemic, says a survey by the Canadian Institute of Actuaries conducted in the early 2020 pandemic days.

Of these, more than two-thirds said either themselves or a spouse would work longer than planned because they needed the income (69%).

However, a sizeable minority – 15% of respondents – said they would retire early, citing job loss or concerns over workplace health.

More recently, trends suggest a growing surge of retirements. A June 2022 StatCan labour force survey counted nearly 300,000 Canadians having retired over the past 12 months. It’s a record number, and a 27% increase from the same time a year earlier.

Despite the employment upheaval caused by COVID-19, retirement ages have stayed steady, at a median age of 64.5 among all classes of workers combined according to StatCan 2021 figures.

Public sector workers tend to retire younger, with half leaving their job before the age of 62. Self-employed and gig workers tend to retire later, with half continuing to work past the age of 66.

You’re never too young (to save more) for retirement

The word “retirement” can sound old-fashioned to younger ears, and its definition leaves a lot of wiggle room.

Some hear full-stop, “not working,” and collecting a pension. Others envision a new career, pursuing a passion project, or earning extra income with a light schedule of work.

Either way, younger Canadians may be more alert to retirement planning as a result of the pandemic, suggests a survey of people who participate in workplace savings plans.

In its 2021 Global Retirement Survey, MFS Research polled about 1,000 Canadian members of defined contribution (DC) savings plans. The goal was to understand how they think the COVID-19 pandemic will affect their retirement.

Surprisingly, data show younger participants felt a greater impact than older ones, with 57% of those aged under 45 saying they need to save more (compared to 48% of older peers) and 47% that they’d need to work longer (compared to 38%).

These plan members were prompted to rethink their approach to saving for retirement, even from an early age.

That’s a good thing: these younger workers have time on their side to save steadily and enjoy the power of compounding interest, says Laferrière. She wishes more was done in elementary and high schools to promote financial literacy starting at a young age.

“Being financially healthy is a choice and the greatest impact is your behaviour. As a spender, do I spend more than I earn? As a saver, do I put money aside systematically on an ongoing basis? And finally, as an investor, do I follow the course and long-term plan?

“Education is the key to financial success. The short-term risk of market fluctuations is a lot lower than the long-term risk of capital erosion caused by inflation,” says Laferrière.

Women and retirement: pay attention to the gap!

Financial planning and saving money are important for everyone. But it’s especially vital for women due to two well known facts: longer life expectancy and a gender wage gap.

“Also, women are more likely to take time off to care for children or aging parents which translates in less years working and saving and a potential for missed promotions as well,” says Laferrière.

Women in Canada save less than men in their workplace-sponsored retirement savings programs, according to a Mercer March 2021 Retirement Readiness Barometer. It found that women who participate in these plans retire with 30% less than men — meaning lower income in retirement and likely a reduced standard of living.

Between reduced savings and greater longevity, women would need to work two years longer than men to be retirement ready, all other things being equal, according to the Mercer analysis.

Closing this gap may call for some women to take a different approach to both saving and investing, suggests Laferrière.

“Education is key to understand the different risks involved with retirement planning and help achieve the growth required in savings early on, to live the retirement you dream of.”

To invest in your future, the goal is the beginning

Do you know when you might retire? Even if that day seems uncertain or a long way off, setting a target can help steer you toward your goal.

A recent Sun Life analysis of 1.3 million group retirement savings plans participants found that those who had set a retirement goal had account balances 25% higher than those who had not.

Simply having a target in mind helped motivate people into action, from making higher savings contributions to changing how assets were invested.

To get to the next level, working with an advisor may help you save more and stay on track.

“People underestimate the value of financial advice. Our research has found that those who receive financial advice save twice as much, are more confident in their financial situation and better prepared for retirement,” says Laferrière.

Speak with your advisor to assess your retirement needs. Active planning can give you confidence that you have prepared effectively for your retirement and for unexpected events that may impact your retirement goals.

This content is provided for information and illustrative purposes only and is not intended to provide specific financial, tax, insurance, investment, legal or accounting advice and should not be relied upon in that regard and does not constitute a specific offer to buy and/or sell securities.

Information contained in this document has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy.