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The Transformational Impact of the Pandemic on Retirement Planning

The Transformational Impact of the Pandemic on Retirement Planning

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The classic reason to postpone retirement is financial. Cognitive considerations – the need to stay mentally active – also play a part. But the overwhelming reason is that, given that many retirements are projected to last 30 years or more, the need for ongoing financial support for such an extended period of time is profoundly compelling.

Relatively few retiring Canadians enjoy the luxury of a defined benefit pension – typically offered to longstanding corporate employees and those who have worked in public service positions – so most are left to rely on savings, investment income, OAS and CPP to get by.

The Law of Unintended Consequences

Knowing this, many people elect not to retire but to continue working for as long as possible. But then the Covid-19 pandemic hit and, as recently reported in Investment News, another factor – you can call it an example of the law of unintended consequences – appears to be influencing many to postpone retirement:

Rather, the new world of working from the comfort of home has made employment a touch more tolerable, leading many to stay in their current jobs indefinitely or accept new offers for part-time or temporary work. And perhaps the biggest motivator to stay employed is that there isn’t much else to do amid a global lockdown that has isolated friends and families for the better part of a year.

The Investment News goes on to make the following points. Working from home:

  • Delivers extra income and savings.
  • Keeps people busy which in turn promotes cognitive health and peace-of-mind.
  • Is significantly less stressful than they ever imagined.
  • Enables them to remain connected with co-workers, friends and family – remotely.

Even this latter point – the maintenance of remote contact – is not necessarily seen as a negative. People recognize that the pandemic will eventually end and, with that, traditional personal and professional relationships based on traditional personal contact will re-emerge.

Research from the Harvard Business Review

The Harvard Business Review recently published a research report itemizing the three key reasons people are enjoying working from home:

  1. Lockdown helps us focus on the work that really matters. We are spending 12% less time drawn into large meetings and 9% more time interacting with customers and external partners.
  2. Lockdown helps us take responsibility for our own schedules. We do 50% more activities through personal choice – because we see them as important – and half as many because someone else asked us to.
  3. During lockdown, we view our work as more worthwhile. We rate the things we do as valuable to our employer and to ourselves. The number of tasks rated as tiresome drops from 27% to 12%, and the number we could readily offload to others drops from 41% to 27%.

Working from Home is Becoming a Preference

But pre-retirees (and many retirees) are taking note of something else. As the lead taken from a recent article in The Wall Street Journal stated:

Some Americans have a new outlook on remote working: They prefer it.

Specifically, in June and July 2020, a group of 1,388 people working from home were asked for their impressions of the experience by workplace consulting firm Global Workplace Analytics and video technology company Owl Labs. And the verdict is…they liked it!

As the story continued: “While roughly 27% said they would have considered such a setup to be ideal before the coronavirus pandemic started, 80% said they would like to continue working remotely for three days of the week or more once the pandemic is over. Many of these people said they would prefer remote work all five days of the workweek.”

Quite frankly, we would not be at all surprised if these numbers and attitudes were replicated in Canada.

Reality Exceeded Expectations

A larger sample of 10,000 employees told researchers that they believed working from home was 30% more productive. One of the study authors, a University of Chicago business and economics professor stated: “Reality exceeded expectations.”

The Wall Street Journal investigation we are quoting was exceptionally comprehensive. It probed a broad category of professions including finance and insurance – which scored high in overall acceptance of working from home – and concluded that, overall, the majority of people found a home-office set-up to be more productive.

Society’s marriage to the nine-to-five work day is fading. Cali Williams Yost, the chief executive and founder at workplace consulting company Flax + Strategy Group concluded:

The traditional 9-5, Monday through Friday, has been fading for years and the pandemic just accelerated that process.

States their website: “It’s not about policies and programs, it’s about an innovative business strategy.”

A Radical Transformation

As scrupulous observers of retirement trends – both existing and anticipated – the experts behind Everything Retirement are predicting that this innovative business strategy is going to percolate its way down to pre-retirees and retirees in a seriously significant way. Attitudes towards the idea of retirement are undergoing a radical transformation.

As the story in Investment News pointed out, “the newfound work flexibility some have found over the past year has led to an ‘introspective conversation many people have had with themselves … and placing a priority on the things they value most.’” It was Matthew Gaffey, managing partner of Corbett Road Wealth Management, who was quoted.

He added that even in normal times recently retired clients go back to work within two years, a phenomenon we at Everything Retirement have reported on frequently in the recent past.

Mr. Gaffey added: “Not always do people take this path because they are forced to, but many because it gives them a sense of purpose, interaction with others, or they are charitably inclined.”

The Everything Retirement mantra that retirement is an extension of a retirees’ present life is becoming all too true. The evidence confirms it, and we welcome it.

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About the author

An avid sportsman (tennis, rock climbing/hiking, diving), prolific reader of biographies, world traveller – some of the many interests that define Geoffrey Bailey. He’s also a widely published newspaper and magazine journalist, author of two bestselling books, and a former advertising agency creative director. Working in tandem with Allyson on Everything Retirement content, Geoffrey provides impeccable research and insight into the issues and interests (from financial to social) that concern today’s retirees.