Posthaste: Canada no longer among best countries for retirement in one of worst years ever to retire

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Good morning!

Inflation, market volatility and rising interest rates have made this a tricky year to retire for seniors worldwide, but it’s even more bleak if you’re Canadian.

Canada fell out of the top 10 ranking of the best countries for retirement security this year, according to Natixis Investment Managers (Natixis IM). In the investment research group’s 10th annual retirement index, Canada dropped five places to 15th out of 44 countries, after securing a top 10 spot for the first time last year.

The main reasons for the drop, Natixis IM said, are a decline in financial well-being and happiness, increased tax burdens, a rapidly aging population and environmental factors, such as a lack of biodiversity.

That comes as soaring inflation, aggressive interest rate hikes and a wobbly stock market wreak havoc on retirees’ finances globally, putting 2022 on track to become one of the worst years ever to retire.

“Retirement security challenges have come home to roost in 2022,” Dave Goodsell, executive director of the Natixis IM Center for Investor Insight, said in a news release.

Amid those challenges, retirees in Canada are making some big mistakes when it comes to their financial planning, leaving them vulnerable to affordability issues, Natixis IM said. For example, 65 per cent are underestimating their life expectancy, and 61 per cent haven’t considered how much inflation will impact their finances. To add to that, 60 per cent aren’t planning for additional health-care costs. Still others lack understanding over where their retirement income is coming from.

Those mistakes could be costly as it becomes increasingly clear that retirees won’t be able to rely on public pensions to see them through.

The current retirement system is on the verge of breaking as the number of seniors boom in relation to younger workers who pay into the Canada Pension Plan, Natixis IM said. There’s no easy fix, especially as governments grapple with rising pension costs amid growing debt. A new model that incorporates individual savings with government initiatives will be necessary in the years ahead.

“Investment strategies, financial planning, employee benefits and policy considerations will all need to factor in a new funding equation that accounts for inflation, interest rates and increased longevity,” Goodsell said.

In the meantime, Canada can look to other countries that are getting retirement right to help forge better policies, Natixis IM said.

Here is Natixis IM’s top 10 list of the best places to retire:

1. Norway
2. Switzerland
3. Iceland
4. Ireland
5. Australia
6. New Zealand
7. Luxembourg
8. Netherlands
9. Denmark
10. The Czech Republic

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INFLATION RELIEF Prime Minister Justin Trudeau greets a young girl in a crowd following the announcement of a package of new measures to help Canadians cope with steeply rising prices during the Liberal summer caucus retreat in St. Andrews, N.B., Tuesday, Sept. 13, 2022. The government will double for a period of six months a sales tax rebate received by low-income earners, at a cost of $2.5 billion. It will also top up a housing benefit for renters, worth about $700 million in additional spending. Trudeau said the government is confident the measures won’t make inflation worse.  Photo by Darren Calabrese/The Canadian Press

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• Pierre Cere, spokesperson for the National Council of the Unemployed, will hold a press briefing at the start of his march to Ottawa.
• Tracy Robinson, Canadian National Railway Co. chief executive, and Ghislain Houle, CN’s chief financial officer, will speak at Morgan Stanley’s 10th Annual Laguna Conference.
• Mary Ng, minister of international trade, export promotion, small business and economic development, will meet with her G7 counterparts in Germany.
• Oxfam Canada, Climate Action Network, Doctors of the World and the Ligue des droits et Libertes are joining with Migrant Rights Network to call on Prime Minister Justin Trudeau and the next parliamentary session to implement a regularization program that ensures permanent residency for undocumented residents and permanent immigration status for migrant workers, students, refugees and families in the country.
• The Senate committee on transport and communications will hear from Philippe Dufresne, privacy commissioner of Canada, on the subject matter of Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
• Today’s data: Canadian manufacturing sales and orders; U.S. producer price index
• Earnings: BRP Inc., Li-Cycle Holdings Corp., DavidsTea Inc.

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• Howard Levitt: Does long COVID count as a long-term disability and the other LTD questions we hear most often
• Vass Bednar: Why Canadians should recalibrate their resistance to private health care

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U.S. consumer prices were resurgent last month, dashing hopes of a nascent slowdown and likely assuring another historically large interest-rate hike from the United States Federal Reserve.

The consumer price index increased 0.1 per cent from July, after no change in the prior month, Labor Department data showed Tuesday. From a year earlier, prices climbed 8.3 per cent, a slight deceleration, largely due to recent declines in gasoline prices.

Food costs increased 11.4 per cent from a year ago, the most since 1979. Electricity prices rose 15.8 per cent from 2021, the most since 1981. Gasoline prices, meanwhile, fell 10.6 per cent in August, the biggest monthly drop in more than two years.

Shelter costs — which are the biggest services’ component and make up about a third of the overall CPI index — continue to rise. Overall shelter costs increased 0.7 per cent from July and 6.2 per cent from a year ago, both the most since the early 1990s.

— Bloomberg

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China’s economy has been immensely successful by most measures. But its currency — the yuan — only accounts for three per cent of global trade. Despite its economic and political power, the country doesn’t dominate the global flow of fiat currency. Now, it’s looking to change that. Our content partner MoneyWise lays out China’s multi-trillion, multi-decade plan to replace the U.S. dollar as the world’s reserve currency.

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Today’s Posthaste was written by Victoria Wells (@vwells80), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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