Canada and US approaches to Retirement, the same but different

Back in 2012, the Society of Actuaries (SOA) completed a survey that looked at how Canadians and Americans prepared for their retirement. It was an interesting report. Canadian and U.S. respondents were asked to indicate their level of concern about eight post-retirement risks. Ranking these risks by the percentage of respondents saying they were very or somewhat concerned about each, shows strong similarities between retired and pre-retired respondents and between Canadian and U.S. respondents.

Specifically, Canadian retired and pre-retired respondents are most likely to say they are very or somewhat concerned about maintaining a reasonable standard of living for the rest of their lives, followed by:

• Having enough money to pay for adequate health care

• Depleting all of their savings

• Having enough money to pay for long-term care expenses

• Maintaining the same standard of living for their spouse/partner, if the respondent should die first (among those married or living with a partner)

• Their financial ability to stay in their current home for the rest of their lives

Canadian respondents are less likely to identify two risks as very or somewhat important:

• Leaving money to children or other heirs

• Relying on children or other family members to provide assistance

In the United States, retired and pre-retired respondents are most likely to express high levels of concern about having enough money to pay for adequate health care, but their next four concerns are similar to Canadians:

• Depleting all of their savings

• Having enough money to pay for long-term care expenses

• Maintaining a reasonable standard of living for the rest of their lives

• Maintaining the same standard of living for their spouse/partner, if the respondent should die first (among those married or living with a partner)

U.S. respondents are less likely to identify three risks as very or somewhat important:

• Their financial ability to stay in their current home for the rest of their lives

• Leaving money to children or other heirs

• Relying on children or other family members to provide assistance

Although the health care and long-term care systems in Canada are very different from those in the U.S., with the Canadian system generally being considered more supportive of those in need, it is somewhat surprising to note that Canadian retirees had more concerns than U.S. retirees.

The Canadian pre-retirees’ higher concern about maintaining a reasonable standard of living after retirement may be due to the lower level of social security benefits in Canada for workers above the average wage. Although the Canadian social security system is financed on a basis that is more sustainable in the long term than U.S. social security, many of the U.S. respondents may not be aware of the significant financial challenges to U.S. social security in the long term.

We here in Canada have many of the same concerns as our American neighbours, with health care being among the top concerns. Our concern is not about going bankrupt if we need care, but finding a good place and having enough to pay for medications not covered by our Provincial Health Care system.