The StatsCan data referenced in Fidelity’s study, which shows that retiring Canadians would need to replace 75% to 85% of their pre-retirement incomes, is available online. Unfortunately, I couldn’t find support for the assumption that consumption levels remain the same in retirement as in working years.
The StatsCan data breaks down households into three categories based on the age of the reference person: (1) 55 to 64 [we’ll call pre-retirees] (2) 65 to 74 [retirees] and (3) 75 or over [seniors]. The study finds that incomes dropped 34% between pre-retirement and retirement and a further 27% between retirement and senior years. But, expenses also dropped 30% between the first two groups and a further 28% between the last two. The study concludes that:
As households age, income drops steeply because of loss in earnings whereas the drop in personal consumption is more gradual.
It is difficult to say if lowered expenses are a result of reduced income or due to lifestyle changes. However, it is clear that total spending on consumption does not remain the same in retirement. Perhaps the critics are right in claiming that Fidelity has a vested interest in urging Canadians to save more.