In case you missed it, peak early retirement happened in 1998.
The average retirement age that year was 60.9 years, which compares with 65.3 in 2024. Let’s start with the trade war in documenting how this quiet demise of early retirement came to be.
The trade war is the latest in a series of financial shocks that includes the exploding of the tech bubble in 2000-01, the global financial crisis in 2008-09 and the pandemic in 2020. With financial markets acting erratically every few years, it’s natural to feel like you should push off your future retirement date to save more.
The trade war has caused some people to rethink their retirement plans, said Janice Holman, a principal at actuarial consultants Eckler Ltd.: “People who are ready to retire are probably going,” she said. “But those that are within, let’s say, a three-year window of retirement, are probably going to hold out for a while.”
It’s easy to put a negative spin on delayed retirement in a country where Freedom 55 is one of the all-time most memorable marketing slogans. Decades ago, an insurance company used the term to sell wealth management and financial planning services that would ostensibly allow people to retire early.
Retiring later makes perfect sense in today’s world, but the numbers documenting this trend still seem jarring. A Statistics Canada database on retirement shows that the average retirement age in the late 1970s was around 65. The average fell steadily to the 1998 low and then chugged higher for the next 25-plus years to levels above age 65.
Ms. Holman and Eckler colleague Ian Edelist explain that the early retirement trend was in large part fed by surpluses in workplace pension plans. Some employers used these surpluses to pay for early retirement programs that helped reduce their work force.
Many pension plans went from surplus to deficit as a result of stock market setbacks in the 2000s, which in turn closed the window for early retirement. At the same time, other trends started to influence people into retiring later:
– Longer lifespans: Working longer offers the opportunity to save more, and to stay active and involved.
– Homebuying: Upscaling homes later in life has left people with mortgages at a time when they would otherwise devote full resources to retirement saving.
– Family obligations: Parents are increasingly providing financial support to adult children in the form of money for everyday expenses and larger ones like home down payments; working longer is a way to afford this cost.
Ms. Holman said the biggest worries that people nearing retirement have are inflation and running out of money. The trade war doesn’t help on either count.
While the trade war could put the economy into recession, there’s also a possibility that tariffs could push up consumer prices. A recession would be negative for the stock market, which makes people worry about the adequacy of their retirement savings.
The Statistics Canada numbers show that men retired at an average age of 66.3 in 2024, compared with 64.4 for women. Public service workers retired two years earlier than the broader population on average last year, while self-employed people retired 3.5 years later.
The early retirement trend had its heyday in the public service, where the average retirement age fell as low as 57.8 in 1998.
All the factors driving later retirement have an air of permanence to them, including disruptions in the economy and financial markets. Does anyone seriously feel like there’s a long period of global calm coming at some point in the near to medium term? Me, neither.
Ms. Holman said the average retirement age could at some point reach 70, but she sees a more interesting story emerging in the way people are retiring from full-time work and then continuing in the work force on a limited basis.
“People will just naturally work longer because they’re healthier than they were 30 years ago, and longevity is quite a bit longer as well,” she said.
One exception to the later retirement trend is the FIRE movement, which stands for financial independence, retire early. FIRE requires an intense stretch of working hard and saving harder to achieve a degree of financial freedom. Later retirement seems easier.
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