As Canadian live longer and face tougher financial choices in their golden years, fewer than a third of respondents in a new survey plan to be fully retired by 66.

Sun Life Financial's annual Unretirement Index poll, released Wednesday, found that only about three in 10 Canadians surveyed said they plan full retirement at that age.

'Some Canadians believe they'll have to work longer to be able to pay for basic living expenses'—Kevin Dougherty, President, Sun Life Financial Canada

Nearly five in 10 — about 48 per cent — said they plan to work part-time or freelance while they ease into retirement.

The poll results from Canada's third-biggest insurance company reflect what other public opinion surveys have shown for a while — that Freedom 55 is a thing of the past.

"Canadian retirement expectations are changing with many planning to work longer and almost half of Canadians looking to phase in their retirement," said Kevin Dougherty, president of Sun Life Financial Canada.

"These results are not surprising given the current economic volatility, increasing consumer debt loads, rising healthcare costs, longer life expectancy and lack of planning. We're also finding that some Canadians believe they'll have to work longer to be able to pay for basic living expenses."

Around the world, a retirement crisis looms as debt-strapped countries scale back benefits, raise the retirement age or make other moves to deal with rising obligations and weak economies.

Battle over Old Age Security

In Canada, the federal government wants to scale back the long-term costs of Canada's Old Age Security program, and has met harsh criticism from critics and the opposition over suggestions Ottawa may raise the OAS retirement age to save money.

On Tuesday, Human Resources Minister Diane Diane Finley told a Canadian Club meeting in Toronto that younger Canadians would face higher taxes, fewer social programs or larger deficits unless major reforms are started right now.

Meanwhile, a recent report to the Ontario government recommended cuts to pensions for teachers, nurses and other public sector workers because they are unaffordable in a slowing provincial economy.

No choice but to work

In the Sun Life poll, about 61 per cent of those who said they expect to work past the traditional retirement age of 65 said they would do so because they have to, while 39 per cent said it's because they want to.

The retirement issue is coming to the fore as the workforce ages and baby boomers are set to retire in the coming years, leaving fewer employees to pay into benefit plans and more drawing from them.

Canadians are also living longer — with average life expectancy now at 85, according to Statistics Canada. Retirees will need to factor that in to savings plans.

Research from Statistics Canada released in the fall found that a 50-year-old worker in 2008 could expect to stay in the labour force another 16 years -- 3.5 years longer than would have been the case in the mid-1990s.

Meanwhile, nearly half of respondents — 43 per cent — said they plan to start phasing into retirement between the ages of 60 and 65, while 21 per cent said they plan to start earlier — between ages 50 and 59 and eight per cent plan to start between 66 and 70.

"Interest in phased retirement has been growing over the past few years," said Ian Markham, a retirement analyst at the Towers Watson consulting company.

"Baby boomers are looking at it as a way to prolong their careers, pay off some debts and make a smooth transition into retirement. Having additional income during this transition creates an additional financial safety net for Canadians - which we're seeing as increasingly important in today's economy."

Nearly half of respondents to the Sun Life survey said they are worried about having debt in retirement. More than twice as many respondents, 44 per cent, said that that paying down debt was the number one priority, compared to 20 per cent who said they prioritized retirement.

Sun Life's index was compiled by Ipsos Reid, which surveyed 3,701 working Canadians from age 30 to 65 between Nov. 29 and Dec. 12.

It has a 1.6 percentage point margin of error, 19 times out of 20.

Such surveys are routinely done by banks, insurers or other financial companies to research their customers's views and promote financial products and services such as mutual funds and wealth management and financial planning advice.

With files from CBC News