There’s a huge gap between how much money Canadian employees say they’ll need to retire and how much they’re actually saving.
A survey by the Canadian Payroll Association finds that there’s been an increase in what employees consider an adequate amount for retirement.
Thirty-five percent think that savings of between $1 million and $2 million will be needed compared with 28% last year. And 30% feel that $500,000 to $1 million will be sufficient for retirement compared with 34% in 2012.
However, the vast majority (73%) of working Canadians say they have put away only less than a quarter of what they need to retire.
Among employees closer to retirement (50 and older), 47% say they are still less than a quarter of the way there.
The gap between retirement needs and savings will likely force many employees to remain in the workforce longer than planned.
“Many employees know they have to save more,” says Charmaine Marsden, the association’s chair. “In fact, not saving enough is the top reason cited in the survey for having to work beyond their planned retirement date.”
The rate of savings also remains low. Forty-five percent are saving only 5% or less of their pay, while financial planning experts often recommend a retirement savings rate of 10% of net pay.
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