A recent Retirement Survey revealed that while 68% of Canadians are currently saving for retirement, 70% are worried that they are not saving enough. According to the findings, the average Canadian expects to need $697,000 in retirement savings, less than the average amount of $753,000 expected back in 2017.
Findings from the 2019 Scotiabank Investment Poll also suggest that retirement planning has taken a back seat due to more immediate financial priorities. Only 23% of Canadians considered saving for retirement a top priority, down 9 points from 2017. As well, 66% of Canadians are concerned that they have underestimated how much money they will need in retirement and nearly half (47%) are concerned they will need to rely on family for financial assistance.
"We're encouraged to see that 68% of Canadians are currently saving for their retirement, but it's clear from the results of our survey that they don't know whether they're saving enough," said D'Arcy McDonald, SVP, Retail Deposits, Investments, and Payments for Scotiabank. "As we approach the RRSP contribution deadline, we encourage all Canadians, whether you have a high-performing portfolio or are setting up your first RRSP, to connect with a financial advisor who can help chart a path to reach your retirement goals."
Of the 32% of Canadians who are currently not saving for retirement, almost half (45%) are between the ages of 18 and 35. Mr. McDonald added, "We know that younger people have different priorities at this time in their lives as they strive to get momentum in their careers, pay down student loans, and save for their first homes. The best advice we can give young Canadians is to start saving early for retirement. Even if it's not much, a small amount that's made through an automatic contribution is a great way to establish habits that will pay off in the long term as a critical part of your financial plan."
Half of the Canadians saving for retirement have not visited a financial advisor in the last 12 months (50%) and 39% don't think they have enough money for a professional advisor to be interested in helping them.
Three Tips for Retirement Planning:
1. Know Your Number: How Much Should You Save?
Many financial advisors suggest that $1 million might be the threshold for a safe and secure retirement, significantly more than the roughly $700,000 the average Canadian thinks they need to save for retirement. According to the 2019 Scotiabank Investment Poll, 58% of Canadians expect their retirement income to come from government pension programs, 47% to come from personal savings in RRSP/RRIF, 37% from Personal savings help outside RRSP/RRIF and 34% from personal employer sponsored pension plans.
While there's no hard number for retirement savings – so much will depend on your individual spending habits and lifestyle goals – now is the time to assess what you've saved so far and how much you'll have by the time you retire at your current contribution rate.
2. The Other Magic Number: How Much Will I Spend?
Many retirement experts suggest that prospective retirees should expect to spend about 70-80% of their pre-retirement budget. If you're like most Canadians and haven't been in the habit of keeping a budget, take some time to review your current expenses. Factor in all your fixed costs (rent or mortgage, utilities etc.) and then review your credit card records and bank statements to track your discretionary spending.
The nice thing about tracking your expenses is that you'll probably identify key areas where you can eliminate spending and ultimately put away more money for retirement.
3. Visit a Financial Advisor
One common misconception among Canadians is that they require a minimum amount of money saved before meeting with a financial advisor. Not true. Anyone can meet with a advisor and receive advice from a trusted expert.
The recent Financial Worry poll illustrated that lack of knowledge (47%) and time constraints (31%) are part of what is holding Canadians back from making decisions that could change their financial future. Utilize the expertise of your financial advisor to increase your financial literacy, create a long-term financial plan, and to gain piece of mind.
• 70% of Canadians are concerned about not having enough money to support retirement
• 2-in-3 Canadians expect to need less than a $1 million to fund their retirement
• Average Canadian expects to retire at 64 years old
• 59% of Canadians are worried about losing their financial independence in retirement
• 53% of Canadians are concerned they will have to re-enter the workplace after they officially retire
• 46% of Canadians plan to retire between 60 and 70 years old, 6% don't plan to ever retire
• 45% of Canadians are concerned about their parents' health and how it will impact them
MILLENNIALS (Ages 18-34)
• 62% currently saving for retirement
• Expect to need an average of $704,000 to fund their ideal retirement
• Average age of expected retirement – 62 years
• Millennials are more focused on prioritizing travel and spending time with family/friends in retirement than older generations
• One in five millennials feel very comfortable they are on track to meet their retirement goals (21%)
GENERATION X (Ages 35-54)
• 74% currently saving for retirement
• Expect to need an average of $768,000 to fund their ideal retirement.
• Average age of expected retirement – 64 years
• Gen Xers view travel and maintaining a comfortable lifestyle as their number one priority in retirement
• Less than 1-in-5 Gen Xers feel very comfortable they are on track to achieve their retirement goals (12%)
BOOMERS (Ages 55+)
• 64% currently saving for retirement
• Expect to need an average of $572,000 to fund their ideal retirement.
• Average age of expected retirement – 66 years
• Boomers are significantly more likely to prioritize keeping healthy as their number one goal in retirement
• One-in-four Boomers feel very comfortable they are on track
The 2019 Scotiabank Investment Poll was conducted by Nielsen Consumer Insights between January 25 and February 3, 2019. A total of 1,012 completed surveys were collected from a random sample of panel members across Canada.