The journey through retirement is changing as over 50% of people are no longer retiring in the usual way, and retirees today predominantly targeted and catered for by financial advisers are growing smaller as a customer group. This trend is expected to continue over the next 15 years, Canada Life revealed today in a report.

Classed as "financially mature and stress-free," this customer group, which used to represent almost a third of the market, has already contracted by 25% since 2010 and now accounts for around one-fifth of the over 60s market today. 

Retirees in this group can be categorised as having very comfortable levels of wealth and health built up over a lifetime of good fortune in employment and family life. The decline of this group can be attributed to societal changes such as fewer people having defined benefit pensions and the declining prospect of home ownership for a generation of renters.

These societal shifts stem from changes such as how we; are choosing to spend our time, accumulate and spend wealth, the rise of individualism and the declining relevance of social norms. 

A decade ago, almost a third of those in their 60s and 70s were in this "financially mature and stress-free" category, according to research carried out by Canada Life in conjunction with strategic trends forecasting agency Trajectory Partnership. Today these retirees currently make up around 21% of the retirement market, and financial advisers have built their business models to cater for this group. 

However, in contrast to the decline of Financially Mature and Stress Free retirees, two emerging retirement journeys will grow to dominate the retirement market over the next 15 years. 

  • Complex Families, Complex Finances will be the largest group of retirees by 2035, as divorce, second marriages, step children, and the need to support ageing parents all impact their finances. 
  • Late Financial Bloomers, are a small but fast-growing group. These people get married, buy property, have children and build financial stability later in life, condensing the time they have to build wealth for retirement. 

Sean Christian, MD and executive director, Canada Life's Wealth Management Division, said: "As an industry we have already witnessed a significant shift in client profiles over the last decade and this trend is only going to accelerate.

"We need to continue to understand these changes as we work to better support advisers to help these emerging groups of retirees who will dominate the market in the coming years. Advisers are perfectly placed to balance the needs of clients today and consider how the more complex retirement journeys of the future will shift how they support and guide a future generation of clients."

Paul Flatters, co-founder and CEO, Trajectory, said: "Just 10 years ago, the largest group of retirees would have fitted into the ‘Financially Mature and Stress Free' category, but social norms are changing and disrupting the retirement market. Accelerated by the events of 2020, unemployment rates will continue encouraging boomerang children to return to the family home, while divorce rates, second marriages and the likelihood of needing to pay for elderly parents' care costs are all on the rise."

"Coupled with the fact that participation in defined benefit pension schemes is declining and we have a generation of renters facing the prospect of never owning their own property, all of which is impacting the declining dominance of these retirees."

Canada Life has teamed with our sister title Professional Adviser to explore the changing themes around retirement and investment advice. Click here to access your exclusive, free Remodelling Retirement guide and learn more about the changing needs of clients in retirement.

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