The Royal York Hotel was the scene of a lively debate Thursday between Sherry Cooper, chief economist of BMO Capital Markets, and Malcolm Hamilton, actuary at Mercer Consulting. Hosted by the Canadian Pension & Benefits Institute, Cooper spoke at length about her new book, The New Retirement.
Cooper explained that the impending exodus of boomers from the workforce will profoundly affect the labour markets, the economy, and financial markets for decades. However, she believes the way boomers will retire will be very different from their predecessors, with phased retirement and extended careers being prominent. Cooper says many Canadian workers will choose to remain in the workforce well beyond age 65 due to increased longevity, but will do so on their own terms, defining their role as they go along.
Cooper says that the boomers are the most educated and knowledgeable group in Canadian history which helps them to live longer, more productive lives. “Those who continuously educate themselves live longer,” she said. “Avid readers live longer. People who are interested in the world around them, who continue to read newspapers, who do things like play chess or bridge, who are connected, live longer.”
Citing a study on air traffic controllers, Cooper suggested that people in the 55-year-old range were better equipped mentally to deal with stress and emergencies than their younger counterparts. “The findings indicate that 55-year-old controllers are far better at dealing with an emergency than 25 or 45-year-old controllers,” she said.
She also suggests that Canadians are overly anxious about their retirement savings. “The financial situation of Canadian pre-retirees and Canadians retirees is much better than most people realize,” she said. “I think the financial services industry can be rightfully accused of making everyone fearful of the possibility of retirement and how they might run out of money. On top of that, they can expect to live a life where they’re windsurfing and traveling every year.”
Malcolm Hamilton was invited to the event to play devil’s advocate, and said he agrees with Cooper on everything except the “very optimistic characterization of aging and retiring.” “Everybody knows longevity is increasing,” he said. “There’s nothing new about this. Every generation of Canadians has had this wonderful experience.”
Hamilton questioned the usefulness of “self-employed part time retirees,” and wondered aloud at who is watching over them to verify their contribution to the workforce. “If they miss a sales call, who kicks butt?” he said. He suggested that boomers are no more special than any previous generation, and mostly face the same issues as their predecessors.
Hamilton’s main point was that all the information regarding boomers’ retirement habits are theoretical, as they haven’t started to retire yet. “No boomer in the whole world has yet worked past 65, and none will for three more years,” he said. Pointing out that surveys have supplied the majority of data on the subject, he added, “So you’ve got to take surveys about what boomers think they’re going to do when they retire with a grain of salt, because boomers think when they retire they’re still going to be young. They’re told that, and you have to factor that out of the survey.”
Hamilton took issue with Cooper’s claim about the “sandwich generation” in which the boomers are, “responsible for the care and support of elderly parents, while at the same time, helping their children pay for their education, early-career expenses, and ultimately their first home and their grandchildren’s education.” “Most boomers don’t have any grandchildren yet,” says Hamilton. “And its way too early for them to be paying for their children’s education. Also, adult children caring for elderly parents is not a new invention. The only unique thing about this situation is that the boomers seem to feel the need to be congratulated for it.”
On Cooper’s claim about older brains being more efficient, Hamilton points to chess as a bellwether pursuit. “We can get measures of how older people do playing chess,” he said. “The bottom line is, of the 10 most highly rated players in the world today, none has attained the age of 39. My guess is that if older people were innately, inherently superior at dealing with complexity and long-term memory they would be better chess players.”
Hamilton also took issue with Cooper’s idea that many boomers will choose to continue working for reasons apart from finances. He suggested that there are some people who would like nothing more than to continue working past retirement age, but that many people who are not happy with their jobs would do the opposite. “In my mind it’s very simple,” he said. “The people you see on TV, they want to keep working. The people watching TV, they want to stop working.”
For Sherry Cooper’s interview in the March issue of Benefits Canada, click here.
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