7 ways the pandemic has changed retirement plans

Canadians are all too familiar with the effects of the COVID-19 pandemic. We check the daily case counts like we check the weather. And it’s not just the virus itself. Lockdowns and restrictions have changed how we work and how we shop. It’s changed how we socialize, how we worship and how our children go to school. 

For many Canadians, COVID-19 has also affected our retirement plans. But unlike most things about the pandemic, some of those retirement plan changes might even be for the better. 

Let’s assume you’re in your late 50s or early 60s, and you’ve started thinking about retiring. We’ll look at the upside – and the downside – of retiring during a pandemic. 

Has the pandemic changed Canadians’ retirement plans for the better? 

In the spirit of optimism, let’s start with the upside. It may now be easier to decide to wind up your career for five reasons:

1. You’re psychologically partway there already. 

Pre-COVID, retirement meant a big change in your daily routine and personal interactions. But 18 months, or more, of working from home will probably make the transition to retirement easier. You’ve already given up rising at six, wearing a suit and fighting traffic. And thanks to technology, you’ve probably grown used to little or no personal contact with your colleagues. “I’m sure going to miss those Zoom calls,” said nobody ever.  

2. You might have more money saved. 

If you were able to work from home, chances are you saved a ton. All that money you didn’t spend on commuting, dry-cleaning, lunches out – even designer coffee? It’s still in your pocket. Not to mention what you saved by not being able to go away on vacation. Recent research suggests nearly half of Canadians have saved more than usual during the pandemic.* The more you have saved, the sooner you can think about retiring.

3. You might need less money in retirement. 

Did your dream retirement involve world travel, a winter home in the sunny south, or an annual cruise? Thanks to COVID, you may be rethinking some or all of those plans. With many wanting to be near family in retirement. Sticking closer to home – sigh – will cost a whole lot less than globetrotting. 

4. Retirement might be less stressful than going back to the office. 

If you’ve been working in your fuzzy slippers all this time, you’ve probably limited your contact with strangers. Now you’re looking at returning to an office full of people, via a bus or train full of people. Yikes! If you were already sitting on the fence about retiring, that might be reason enough to take the plunge.

5. Leaving the city might look more attractive. 

Many Canadians are counting on home equity to help finance their retirement. That means downsizing, or even moving to a smaller, less-expensive community. But maybe you’ve been putting off the Big Move. After all, moving is a pain, especially if you’ve lived in your home for many years. But today, large, congested cities look less appealing than they once did. A smaller, less-crowded community might offer a healthier lifestyle. Note, though, that the financial payoff for moving to a smaller town is less than it used to be. You’re not the only one thinking of moving. The demand from remote-workers plus retirees has pushed home prices in popular smaller centres to previously unheard-of heights. You may not be able to tap as much of your home equity as you once could.

How has the pandemic had a negative impact on retirement plans? 

It hasn’t been all good, of course. There have been two major downsides of retirement planning in the pandemic:

1. You might have saved less money.

Maybe you lost your job permanently or temporarily during the pandemic. You may have had help from the government, and you could be back at work now. But you might not have kept up with contributions to CPP, your company pension, your RRSP or TFSA.  Research also shows more Canadians saved nothing at all for retirement last year, compared with the previous year.* And, The Canadian Institute of Actuaries (CIA) recently reported:  

• COVID-19 has impacted the retirement timelines of nearly 1 in 4 of respondents. 
• Of those, 69% say they’ll have to work longer because they need the income.  

A setback like that could push your retirement date farther out than you'd planned.