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21 November 2012

More Than Six in 10 Canadian Pre-Retirees Expect to Work Past Age 65, Finds Munich Re Survey

Concerns related to rising healthcare costs are weighing on the minds of Canadian retirees and pre-retirees according to a new survey conducted by Munich Re. These concerns are cited as a key factor for individuals deciding to delay retirement.

More than 60 percent of those nearing retirement plan to work longer to hold onto their benefits. Among active employees receiving healthcare coverage from their employer, 30 percent cited continuation of health and dental benefits as the main reason to keep working past 65 years of age.

“As Canadian workers have taken on a greater share of the burden for post-retirement healthcare expenses, too many find themselves financially ill-prepared to do so,” said Richard Letarte, Senior Vice President, Group Reinsurance at Munich Re. “Working longer to receive employer-sponsored benefits may be a solution for some, but over the long run this is not a sustainable plan of attack for those nearing retirement. Private insurance, as part of a sound financial plan, can provide Canadians with a safety net to protect against potential future healthcare costs which continue to rise at a rate outpacing inflation.”

Canadians expect to spend an increasing proportion of their retirement income on health-related needs as they age, with nearly seven in 10 (68 percent) in agreement that healthcare will account for a greater percentage of their expenses. At the same time, relatively few are financially ready for or understand the magnitude of potential future healthcare costs. According to the survey, less than one-third (32 percent) are financially well-prepared to deal with health needs during their retirement years and only 26 percent are confident they could financially handle a sudden, unexpected illness or accident during their retirement without compromising their lifestyle. Furthermore, almost half of survey participants estimated the total cost of their employer sponsored health benefits to be less than half of the actual cost.

“Whereas in the past the majority of Canadian workers could rely on their employers and the government to cover a significant share of their healthcare costs in retirement, the landscape has changed,” said Faizel Alladina, Vice-President, Group Development at Munich Re. “Canadian retirees will be responsible for a much larger percentage of their healthcare costs. These costs, which continue to rise each year, can be prohibitive. Annual drug costs alone can cost tens of thousands of dollars for newer specialty drugs being developed by drug manufacturers for health conditions like cancer and rheumatoid arthritis, and for other less common conditions, these costs can be in the hundreds of thousands. Many of these drugs are not covered by provincial pharmacare programs for seniors and can leave individuals exposed to provide for these expenses themselves,” says Mr. Alladina.

Canadians today largely understand that the burden for paying for future healthcare costs has shifted away from the government. Just one in 10 (11 percent) of those surveyed believe that the government will take care of all costs if they become sick during their retirement years and slightly more than three-quarters (77 percent) understand that the government covers only part of what they will need.

About the Survey
The online survey of 2,032 Canadians on the Ipsos I-Say Canadian Online Panel was conducted between December 7, 2011 and December 16, 2011 and between January 17, 2012 and January 23, 2012. The survey targeted Canadians aged 55 to 70 who are or have been members of an employer-sponsored health and/or dental plan: 1,000 Canadians who are still working and not yet retired and 1,000 Canadians aged 55 to 70 who have retired within the past five years. A random sample of this size (2,032) would have had a margin of error of +/- 2.2% nineteen times out of twenty.


Disclaimer

This press release contains forward-looking statements that are based on current assumptions  and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and  other factors could lead to material differences between the forward-looking statements given  here and the actual development, in particular the results, financial situation and performance of  our Company. The Company assumes no liability to update these forward-looking statements or  to conform them to future events or developments.

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Shawn Elliott, Assistant Vice President
Phone: +1 416 359 8015


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