Back then, the group-plan space was known as the capital accumulation industry, reflecting its justified desire to ensure people were putting money away for their future. Fast forwarding to today, Monteiro says the pendulum has swung, and Canadians now have to think harder about income generation and spending in retirement.
“Under the old model, we expected that people who retired 65 could live for another 10 years, maybe 15 years if they were blessed,” he says. “Now you might expect a 65-year-old retiree to live for another 30 or 40 years.”
The economic environment has also become more complicated. While globalization and technology-driven prosperity since the turn of the millennium might have put inflation fears on the back burner, the CPI today is rising at a pace not seen in decades, threatening to eat away at people’s purchasing power – retirees included. In an effort to bring stability, central banks have been raising rates, creating opportunities for fixed-income investors while also raising the cost of borrowing across the board.
“The nature of retirement itself has also gotten a lot more complicated. It’s not just about working in the same company for many years or decades anymore,” Monteiro adds. “You may not be working for a company at all when you retire. And a lot of people today won’t really do nothing after they retire. Instead, they transition to the next thing.”
For a large contingent of Canadians, life after retirement may be about doing part-time work, or working as a consultant; those who advanced to senior positions might join a corporate board. Other retirees are pursuing entrepreneurial endeavours, he adds, noting how many new businesses today are formed by people in the so-called “new retirement.”
