Nearly three-fifths (59%) of Canadians say that they are currently saving for retirement, but many are not necessarily confident that they are doing so effectively.
BlackRock’s second annual Global Investor Pulse Survey finds that only 30% of respondents say that they are well prepared financially for retirement, and 33% say that they will likely never be able to retire.
Nearly half (48%) say they are concerned that they will outlive their savings in retirement, and half are concerned that future generations will not be able to save enough for a comfortable retirement. The most commonly cited reasons for not saving are lack of disposable income (64%) and other spending priorities (32%).
Given the relatively low savings’ rate, Canadians’ expectations of how much income they will need in retirement is ambitious. On average, respondents say they will need an annual retirement income of $69,700, while the youngest age group (25 to 34) expects to need far more: $94,800 a year.
But despite the savings gap, and despite the low actual rate of saving, Canadian investors are generally confident they can meet their income goals, with 60% saying they are very or somewhat confident they will attain their expected income in retirement.
“Setting realistic goals is an important first step in financial planning, but our survey reveals that Canadians have conflicting attitudes and behaviours when it comes to retirement and conflicting perceptions of how well prepared they are,” says Noel Archard, managing director, head of BlackRock Canada. “Younger people in particular have less clarity about their after-work years.”
Although six in 10 (61%) Canadians say that they take financial planning seriously, this doesn’t necessarily mean that they act when faced with their own life events. Four-fifths of respondents experienced some form of life event over the past 10 years, from buying a home or starting a family, to getting a divorce or retiring.
Yet relatively few respondents say they are taking concrete steps to financially prepare for those events. Of those who retired, only 19% sought professional financial advice, and one in three did nothing at all. While the average Canadian spends two hours a month reviewing their savings and investments, one in five (21%) respondents said that they spend no time at all doing so.
Adding to this, fewer than half (45%) are maximizing contributions to their workplace pension plans, and nearly half (46%) do not know what the maximum contribution is.
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