Since the Second World War, most Canadians have perceived their lives in three distinct phases: education, work and retirement. We toiled for years in school and then our workplaces, partly driven by the promise of a few golden decades of golf, exotic travel and M*A*S*H reruns at the ends of our lives. And thanks to unique circumstances, this third phase of life has stretched longer and longer. Between 1976 and 2000, Canada’s average retirement age fell from 65 to 61.5, where it stabilized amid tight labour markets. “The last few decades have seen a gradual emergence of ‘free’ time after age 50 or 60, between the time when the official work years end and real old age sets in,” one Statistics Canada paper noted. “For most people,” it added, “early retirement has practically become an acquired right.” It may seem it’s always been this way. However, the notion of “Freedom 55” was the product of a very specific era. The determined fecundity of postwar westerners filled the world with the baby boomers; their sheer numbers in the workforce redefined the art of the possible. Some combination of government income, private savings and possibly an employer pension sustained people until the ends of their lives. Advances in health care greatly extended their lives. And the economy became increasingly knowledge-based, creating more jobs that did not physically destroy workers’ bodies. But the epoch of early retirement is unlikely to endure. Retirement is being pushed further away by several forces, from demographics to financial constraints to the fact that today’s retirees no longer hear the siren call of the EasyChair. If you dream of a decades-long leisurely retirement, you may want to dream again.
We will all need to redefine our retirement expectations as the boomers vacate the workforce. Statistics Canada predicts that the ratio of workers to retired persons aged 65-plus will fall to about 2:1 by 2031 from 5:1 now. Tax revenues will fall as health-care expenses soar.
Meanwhile, employers are becoming increasingly disinclined to guarantee workers’ retirement income. Financing the golden years is increasingly left to workers themselves, and available evidence suggests many aren’t doing a great job of it. Three or more decades of well-funded leisure may remain an option only for increasingly narrow sections of society: civil servants, the wealthy and perhaps those willing to make extraordinary financial sacrifices during their working lives. For the rest, the final chapters of life are poised to change dramatically. “We can’t stuff a 21st-century life span into a life course designed for the 20th century,” warns Marc Freedman in his new book The Big Shift: Navigating the New Stage Beyond Midlife.
The good news is that a significant and growing segment of Canadians already accept this, and indeed welcome it. Surveys consistently suggest many boomers don’t want a few decades of gardening and lawn bowling. Many say they enjoy work and want to remain active—physically, intellectually and socially. “People are living longer, and are often in second marriages or relationships and sometimes have younger kids,” says Lorraine Clemes, a career coach whose firm Life Design Consultants helps clients customize their retirements. “I do think boomers have a different mindset than previous generations, to whom 65 felt much older.” There’s also a substantial body of research that asserts remaining in the workforce is a good way to stay healthy—and that with the decline of neighbourhoods and local organizations, the importance of workplaces as places of social interaction increased. “Encore careers are to the new stage what leisure was to retirement: the goal, a way of turning necessity into a virtue,” Freedman contends.
Unfortunately, the growing body of “new retirement” literature likely overemphasizes self-actualization. In March, Sun Life Financial released the results of a survey of more than 3,400 Canadians aged 35 to 65 on their retirement hopes and expectations. Respondents’ on average expected retirement age was 68—far later than observed today. Notably, those earning more than $100,000 a year expected to retire at 65, a more traditional age. But those earning less than $50,000 couldn’t see leaving the workforce until 70. Pedro Antunes, a Conference Board economist, says prevailing research shows the decision to leave the workforce is dominated by the size of nest eggs. “If people have enough to retire,” he says, “they tend to do so.”
The recession brought this reality into clearer focus. As Canadians made their final 2010 RRSP contributions earlier this year, the Conference Board of Canada declared that as a result of the damage to retirement portfolios caused by the great recession, the dream of retiring at 55 had died. Even though Canadian stocks had already recovered, diminished growth expectations had led many to rethink their plans. Of 2,000 Canadian boomers surveyed, more than one in five said they’d pushed back their anticipated retirement by a year. “People do feel they’ve lost a few years of returns at least, from the hit they took to their portfolio,” says Antunes. But such small adjustment won’t be equal to the task at hand. “Working longer, potentially by two to three years, is inevitable for many,” opined HSBC, the global financial institution, in a recent study. “Retirement will be a multi-stage process over potentially more than 30 years.”
A horde of sociologists and career consultants touts this as a golden opportunity. It’s variously described as the “third act,” “middlescence,” or “second adulthood.” What you call it is less important than what you do about it. Options and preferences will naturally vary considerably from person to person. Here are some questions to ask yourself.
Should you stay or should you go?
Many Canadians spend their entire careers in a single field. An obvious option is simply to keep working longer doing approximately the same thing. You’ve certainly built up the necessary skills and experience, and may be able to negotiate lateral moves. However, there’s a growing body of literature that advocates doing something entirely different. After all, you could very well have as much time for a second career as you did with your first. “You may want to learn a new profession, launch a whole new career, start a business, or apply business skills to social or volunteer work,” suggests Tamara Erickson in her book Retire Retirement.
Bob Rohrer was a global human-resources director for auto-parts manufacturer Magna International. In 2008, the industry entered recessionary crisis, and Magna contemplated labour cuts the following year. “I knew that at my stage in the career, it would be best for me to go rather than someone younger or in the middle of their career,” Rohrer says. “Arrangements were reached. It wasn’t really a retirement. It was more dealing with the realities of the business cycle.”
Rohrer was 61. Rather than regard this as a setback, he saw it as an opportunity to do something else. Many years earlier, he’d founded a consulting practice, but his corporate work meant he could never direct much attention to it. “I decided, fine, let’s pull this thing off the shelf and get going,” he says. “The skills and abilities I developed in Canada, the U.S., Europe, China, Ireland, I wanted to be able to market to other customers who would have a similar need. That’s when I started to focus on what I was good at and what I could sell.” Rohrer assumed it would take a year of aggressive marketing for Rohrer Consulting to drum up the level of business he wanted, but reports things happened far more quickly than he’d imagined.
Whatever route you choose, Clemes advises giving some thought to what you found rewarding about the earlier stages of your career. “You don’t want to discount what it is that’s already keeping you happy and healthy,” she says. “Sometimes successful, busy people don’t reflect on it.”
What kind of deal do you want?
An extended career needn’t be an arduous continuation of the 60-hour-a-week slog of your youth. Even if you remain in the same field, you’ll likely want to radically alter your arrangements, complete with shorter and more flexible hours. The good news is that you’ll probably have a reasonable bargaining position. Expectations are widespread that employers will become far more accommodating than they have been. The reasoning is that they’ll have no choice but to bend to the will of boomers. As their numbers in the workforce dwindle, their skills will become increasingly valuable. “When labour is valued, there are more opportunities,” explains Antunes. “Real wages will do well. Employers will be more open to part-time, flexible work arrangements.”
Precisely how flexible is an open question, though. Sociologist Lyndsay Green writes in her book You COULD Live a Long Time—Are You Ready? that boomers seemingly all expect dream working conditions in their sunset years. “We want to work Tuesday through Thursday, and mainly in the mornings, from nine to noon,” she claimed. Flexible hours and lengthy vacations also dominate the wish list. “If we want to command this perfect working situation, we’ll need to be an attractive commodity.” The scarcity of your skill sets may well determine how much flexibility you can command.
What matters to you?
One way to answer this question is to consider what activities you gravitate toward when you’re free from external demands. Another is to think back to your more generous youthful impulses. Many 20-somethings devote a few months or years to volunteering pursuits, often in developing countries. Clemes says many of her boomer clients want something similar. “Some want to take the skills they have and work in a developing country, so they work with an NGO,” she says. The über-wealthy often set up trusts or foundations.
There’s growing optimism that boomers will apply their experience and perspective to unleash a flurry of altruism while attacking some of the world’s most daunting problems. Bernice Finley, a career-transition specialist at consultancy Feldman Daxon Partners in Toronto, sometimes asks her clients: When you look out the window at the world, what would you like to change? “Some people want to make it more beautiful,” she says. “Some people want to make it more fair.” Those answers can steer people toward ideal volunteer opportunities.
Before retiring in 1997, Pat Evershed served as a court administrator and justice of the peace at a family court in Newmarket, Ont. “In that capacity, I saw many women that had been beaten by their husbands,” she says. “I guess that’s where my passion lies, in assisting women and victims.” Evershed and her husband knew they didn’t want to sequester themselves in the country. “I didn’t want to be still. I just wanted to do things I thought were useful.” So she began volunteering at various social organizations. Within two years she landed at the Canadian Executive Service Organization, which matches the professional expertise of 2,200 volunteers with the needs of domestic and international service projects. (Recent examples include socio-economic ventures in Nunavut and developing local tourism and agriculture in Honduras.) She helps in those efforts and has also undertaken assignments herself, which has seen her travel to Moldova, Peru and elsewhere.
What must you do to remain in the game?
A person’s ability to set the conditions of their later-in-life employment will in large part be determined by their market appeal. Depending on the field, working longer may mean additional training simply to remain competitive. And if you’re thinking of swapping fields, this could be even more crucial. Figure out where, when and how to acquire the skills and qualifications you’ll need to build a longer career.
During his corporate career, Rohrer represented management in labour negotiations, but wanted to explore mediation of workplace and other disputes. But that requires a different approach than advocacy, and he didn’t have the necessary credentials. It took three months of full-time courses, including one at the University of Waterloo, before he could register himself with the ADR Institute of Canada, a non-profit body promoting dispute resolution services. “This is an opportunity to say: ‘I didn’t do this when I was trying to build my career or feed my family,’” he says. “‘Now’s my opportunity.’ If that means going back to school or doing an internship, don’t be shy about doing that.”
For her part, Evershed felt she needed to keep current on family violence issues. “I heard that Victims Services needed volunteers, so I did the training program. I kept my best practices up to date by volunteering with them and going out in crisis situations.”
Who will be there with you?
If you have a spouse, you’ll need to co-ordinate your extended career with their plans and desires. Depending on circumstances, you may also have obligations to children or parents. “What was important to me when I was making this decision was to make sure my family was totally on board with what I was doing,” says Rohrer. “Because if they weren’t on board, I knew that was going to create unnecessary tension. I took the time and effort to make sure they were included in my thinking.” Evershed’s own plans are highly integrated with her husband’s—they both volunteer for CESO.
Will this be as awesome as you expect?
This advice is practically unanimous among career-transition consultants: look before you leap. Clemes recalls a period during the late 1980s when financial institutions and other organizations laid off large numbers of middle managers, often with generous severance packages. “They would do something like go and buy a franchise for a second career, but they didn’t understand what that world was all about,” she says. “The biggest pitfall is people making assumptions and not checking them out.”
If a particular new career option has caught your fancy, take the time to speak with people already doing it. Better yet, shadow someone on the job. Finley recalls one client who’d worked foreign postings for a Canadian bank. “He came back and wanted to buy a Second Cup,” she says. “I didn’t see the fit, so I said: ‘Here’s your assignment. I know someone who owns a Second Cup. I want you to go follow him for a week.’” Two days convinced the client it wasn’t for him. Warren Lundy, a partner at Feldman Daxon, points out that it’s generally easier for retirees to do this kind of research. “It’s not like they’re giving up a career,” he says. “If it doesn’t work out, they can go somewhere else.”