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March 24, 2020

Postponing retirement new reality for older workers

  • Postponing retirement has become a new reality for many older workers in the wake of the market crash, underlining the need for reform of the rules around retirement saving in tax-deferred programs.
  • In this report, author Joseph Nunes argues Ottawa should raise the age at which workers must stop contributing to tax-deferred saving vehicles and start receiving income from them to age 75 from the current 71.
  • The author quantifies the relationship between saving more during a shorter work career versus saving less and working longer. He finds that starting with a salary of $50,000 and a baseline savings rate of 10 percent of salary, saving an additional 1.5 percent at age 30 is equivalent to postponing retirement by one year. Comparatively, at a starting salary of $100,000, a one-year postponement of retirement equates to only a 1.0 percent increase in the career-long rate of savings.
Joseph Nunes

Joseph Nunes is Co-founder and Executive Chairman of Actuarial Solutions Inc.