Your postal code and your retirement dreams

Postal codes reveal a lot of things that the Canada Post mail carrier doesn’t care about.

Like what ? Like your life expectancy.

If you told me yours, I could tell you if your lifestyle will allow you to spend more or less time in retirement than the average bear.

I don’t have a crystal ball or any special gift. I would simply type the three letters and three digits of your postal code into a truly fascinating tool created by Club Vita.

This company specializes in the evaluation of life expectancy, an expertise that it sells to pension plans. Through the longevity models she created, she determined that where a person lives is the most predictive factor, even more than gender. Why ? Because it says a lot about the way of life, which includes for example the level of wealth, access to health care and the crime rate, lists France Panneton, head of retirement strategy at Club Vita.

Men from Outremont and Brossard have a higher life expectancy than residents of Hochelaga-Maisonneuve and Rosemont, the map reveals. Of course, these are averages, and other factors such as type of job and marital status come into play. But it gives a good idea of ​​the disparities that exist.

In Longueuil and Saguenay, you see everything: from dark green signifying an above-average life expectancy to dark pink indicating the opposite. Gender has a significant impact, as does neighborhood. Other cities are very homogeneous. The differences between Toronto (green) and the Montreal region (smeared in pink) are striking.

Between dark green and dark pink, it has a gap of 3.5 years of life.

To properly prepare for retirement, assessing your life expectancy is key. But is it well evaluated by workers aged 40 to 60? Club Vita asked the question in Canada, the United Kingdom and the United States.

The results are interesting… and paradoxical.

Because even if everyone dreams of a beautiful and long retirement, longevity is underestimated everywhere. Average of 4.7 years.

Women underestimate it by 6.1 years, men by 2.5 years.

In Canada, it is a little better: -5.4 years for women and -2.4 years for men.

This “pessimism” could have “a significant impact on the financial well-being of the elderly”, warn experts from Club Vita. By underestimating the time spent in retirement, we expose ourselves to “the risks of under-saving and excessive spending in retirement”.

According to the Quebec Institute of Financial Planning, 25% of women who retire will celebrate their 96^and anniversary. The same proportion of men will blow out 94 candles.

The chances of spending thirty years in retirement are therefore quite high.

And the cost of living is bound to rise over those decades.

As we have seen for several months, inflation is particularly hurting retirees whose incomes are more or less stable. The pensions paid by Ottawa and Quebec are indexed, but delayed. While employer-sponsored pension plans (called supplemental) rarely are.

Not to mention that the majority of retirees have not even contributed to a supplementary plan! This affects the standard of living: 43% of Quebec seniors earn less than $25,000 a year.

When inflation reaches 6.7% as it does now, and accelerates, retirees begin to dream of indexation. And future retirees too. But it is an expensive luxury.

“Full indexation increases costs by 25%,” says actuary Claude Lockhead, executive partner at Aon.

For a worker whose salary is $70,000 per year, payments into the defined benefit pension plan should therefore total $17,500 rather than $14,000 (assuming contributions representing 20% ​​of salary for a non-indexed pension 2% per year of service). Quite a bill!

“Society’s problem is that it’s never a good idea to save for old age. We want to consume now. Saving is future consumption. Take the test: do you prefer a trip to the South or an RRSP contribution as a Christmas present? asks Louis Adam, professor at Laval University’s School of Actuarial Science.

His colleague Gabriel J. Power, holder of the IG Wealth Management Chair in Financial Planning, agrees. It is true that “inflation hits and hurts” seniors, he says, but if we went back 30 years, these people would probably not want to pay for the indexation of their pension plan.

The 40-60 year olds have the merit of being lucid. Only 23% believe that their retirement savings could or will be sufficient, according to the study conducted by Club Vita. It’s really little. Hopefully this is just the same pessimism expressed about life expectancy.