The expression “60 is the new 40” takes on an entirely new meaning when historically, age 60 meant retirement was just around the corner. This week, Statistics Canada has released a study on “Labour market activity among seniors” and in a decade, employment rates in senior men have risen a shocking twenty percent (11.8% to 14.8%) while employment rates in senior women have risen thirty-one percent in ten years (4.0% to 5.8%). When one in ten seniors continues to be in the labour market, retirement at age 65 is no longer an assumption.
This rise of seniors in the labour market has not been the historic norm – in the 80’s and early 90’s in fact, senior employment was on the decline, reaching its lowest point in 1996. Nearly sixty percent of employed seniors were age 65-69, and just under a quarter of those employed were age 70-74. Among men the industries that were shown to be retaining senior labour, employing collectively two-thirds of all working seniors was the trio of consumer services, business services and primary goods. Of older women in the workforce, more than two-thirds were employed in consumer services, business services or health-related industries.
Within the survey, 79.1% of men and 71.2% of women were homeowners. The men age 65 and over reporting their households still made regular mortgage payments was just under twenty percent (18.8%), and of the women surveyed, sixteen percent (16.3%) continued to carry a mortgage. The remainder of the homeowners were mortgage-free. The overall results of this survey showed that seniors without a mortgage, whether homeowners or renters, were less likely to work. Of the seniors with mortgages, 22.1% of men and 9.9% of women were still actively in the labour market. Debt is literally keeping Canadians working longer. Astonishingly, education was positively correlated with employment beyond age 65. Those with higher education levels were more likely to be employed – especially university-educated men and women.
Speculating on this shift in employment realities for seniors could come down to poor financial planning. Alternatively, it could simply be that more and more, Canadians see themselves living longer and feeling younger, resulting in the decision to live with debt longer and enjoy life at the office for a few more years.
Mortgage brokers have an opportunity to educate the Baby Boomer generation who may have failed to plan ahead, on prepayments of mortgages, the risks of increasing mortgage debt later in life, and the financial responsibilities that will directly impact their retirement plans. Realtors® must continue to complete mortgage verifications, even with their educated professional aging clientele looking to downsize – never assuming that financial freedom is the reality of their Sellers. Ensuring pre-approvals even for older Buyers is also essential practice.
This changing trend should act as an encouragement to decide today on your retirement goals, and work backwards from the age you want to exit the labour market in setting your rate of acceleration on mortgage payments and debt load.