According to research from Investors Group, many Canadians aged 45 to 64 would not be able to cover more than five years of expenses if they were forced to retire tomorrow.
In a study conducted for Investors Group, NRG Research asked 1000 Canadians who were age 45 or older and either full- or part-time employed how they would manage if they were forced to retire suddenly: 40% said they would not be able to cover their cost of living beyond five years, and 16% of these people said they would not even be able to pay the bills for a year.
As for where people would find the money, 83% said that the Canada Pension Plan or Old Age Security would be their primary or secondary source of retirement income, followed by RRSPs/RRIFs (73%), their company pension plan (56%), investment income (46%), earned income (42%), other investments such as real estate or a business (36%), and support from others (17%).
What’s more, if forced to leave work because of a serious illness, only 22% of respondents said they had critical illness insurance and long-term care insurance to help defray costs.
"When faced with sudden retirement, your previous retirement savings goals and payment plan fall by the wayside and a new strategy must be developed to reflect your current assets and opportunities to generate income," says Tim Cottee, Vice President of Retiree Planning at Investors Group "Insurance is not a sexy investment; the decision can be emotional and the idea of it brings about visions that conflict with the future we see for ourselves. It is, however, protection against your future that can rid you of the 'what if' worries and allow you to live out the retirement you had planned if the unexpected strikes."