Not all Canadians believe they’ll be able to achieve their retirement goals, according to two different surveys.
An Angus Reid survey finds that only 26% of Canadians think they’re saving enough to meet their future retirement needs. The survey was conducted in conjunction with the release of The Third Rail: Confronting our Pension Failures, a book co-authored by Jim Leech, president and CEO of the Ontario Teachers’ Pension Plan, and Jacquie McNish, a business reporter at The Globe and Mail.
Despite widespread knowledge about the need to save early and often for retirement, Canadians aren’t taking the necessary steps.
Specifically, those surveyed with a household income of less than $50,000 save on average 7% of their income towards retirement, while household incomes of $50,000 to $99,000 save 9%. Notably, the survey shows that 15% of Canadians aren’t saving anything for retirement.
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The average retirement income wanted by those surveyed was $59,000. Thirty-six percent of all polled would like an annual retirement income of $25,000 to $50,000, with 31% wanting between $50,000 and $75,000 per year.
“Many Canadians will be surprised by how much they will need to save to fund their desired income in retirement and that their income is going to plummet,” Leech explains. “It’s clear that existing pension structures are not allowing people to reach their saving goals. Political leadership is urgently required to bring a more flexible approach to retirement planning, one that can withstand the pressures of more retirees and longer life expectancy.”
Meanwhile, BlackRock’s Global Investor Pulse Survey finds that the top priority for 44% of Canadian investors is “funding a comfortable retirement” (compared with only 35% globally). However, just 64% are confident they can reach that target.
The percentage of take-home pay devoted to living costs, bills and debt is high in Canada (48%) compared to the global average (40%), and only slightly below the United States and Australia (49%).
These costs translate into widespread personal savings deficits. Canadians reported saving, on average, just 14% of their take-home pay each month—just below the global average of 18% and less than in the U.S. (16%), Australia (17%) or Hong Kong (29%).
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Canadian investors also continue to hold a significant percentage of their assets in low- or no-return cash accounts, which accounted for 43% of savings and investments among survey respondents. That’s the lowest rate of cash holdings among countries surveyed and below the global results (56%).
There’s little indication Canadians are ready to move out of cash in the next 12 months. In fact, 84% of those respondents holding cash said they plan to maintain or increase their cash holdings over the next year.
Investors are starting to recognize that their retirement savings will need to last longer than many foresaw—even if they aren’t yet doing enough to pay for their longer lives.
“The good news is that Canadian investors at least seem to be recognizing the danger,” says Noel Archard, managing director and head of BlackRock Canada. “The challenge for them now is to do something about it.”
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