Manulife Survey: Over Half of Early Retirees Quit Involuntarily at Age 56

Advisors have a key role in helping clients plan for unforeseen health issues and sudden job loss that can derail retirement timing.

A Manulife Wealth longevity study reveals that Canadian retirees who exited the workforce prior to age 65 did so at an average age of 56. By contrast, those who retired as planned or later finished work at an average age of 62.

The data highlights that a substantial majority of those who retired earlier than planned were forced into it:

• More than 50% of early retirees did so involuntarily.

• 33% faced the issue due to a health problem.

• 13% left to provide care for a family member.

• 10% were laid off and could not secure new employment.

• Only 31% retired early because they had successfully saved enough or had received an adequate severance package.

Julie Seberras, head of wealth planning and practice management at Manulife Wealth, noted that when clients are healthy and mobile, it is challenging for them to envision an unexpected early exit from work. However, she emphasized that labor market contractions can result in sudden, involuntary job loss. She recommends that financial advisors discuss “what-if” scenarios with their clients to prepare for unexpected circumstances.

Later Retirement Driven by More Than Money

The survey also investigated the motivations of those who retired later than initially planned. While financial reasons were significant, they were not the only factor:

• 42% of respondents retired later to save more money.

• 24% needed extra time to pay off outstanding debt.

• Notably, 33% sought to maintain social connections.

• 27% enjoyed being productive.

• 22% found a sense of fulfillment in their work.

Lifestyle Changes and Trade-Offs

Unplanned early retirement often leads to necessary adjustments in spending habits. The survey indicated that 62% of respondents who were compelled to retire early had to change their lifestyle, compared to 43% of those who retired according to plan or later.

“If you can’t achieve your goal, what are you willing to trade off? And that’s a very individual decision,” Seberras commented. She added that those who retire early are more likely to consider reducing their targeted retirement income goal.

Priorities of Younger Canadians

When Baby Boomer and Gen X respondents were asked for advice for those currently working, the most frequent suggestions were to make retirement savings a high priority and to start saving as early as possible.

However, the poll suggests that younger Canadians are balancing more urgent, competing financial goals:

• 64% of Gen Z identified paying for day-to-day expenses as a top financial priority.

• 61% were focused on saving to buy a home.

• 57% prioritized building up emergency savings.

Retirement savings typically do not become the top priority until individuals reach their 30s. The survey found that 42% of Gen Z respondents identified retirement savings as a priority, compared to 61% of Millennials, 68% of Gen X, and 79% of Baby Boomers.

Seberras pointed out that individuals who start with self-directed retirement planning may only focus on a savings target, neglecting to account for life events that could force early retirement, or the impact of market and inflation risk on long-term capital preservation. She asserted that advisors add significant value by helping clients address their insurance and emergency savings needs.

The bilingual study was conducted in May, utilizing two samples from the Angus Reid research panel: 1,680 Canadian employees contributing to an employer-sponsored retirement plan, and 514 Canadian retirees.