Nearly half (48 per cent) of Canadian employees are contributing as much as they can afford to their workplace retirement plans, but only 41 per cent believe their contributions — including employer matches — will be enough to ensure a comfortable retirement, according to a new survey by T. Rowe Price.
The Canadian portion of the global survey found while target-date solutions capture most defined contribution pension plan contributions, only 16 per cent of respondents indicated they’re invested in a target-date fund. The remainder didn’t believe they’re invested in a target-date investment (63 per cent) or weren’t sure how they’re invested (21 per cent).
Of the 27 per cent of respondents who explicitly preferred default investments, 47 per cent said it’s because they’d rather have a professional determine how their savings are invested. “Canadian retirement savers are more likely than their peers in Australia, Japan, the U.K. and the U.S. to favour default investment options, especially as they grow older and accumulate more savings,” said Wyatt Lee, head of target date strategies at T. Rowe Price, in a press release.
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While most Canadians expect to retire by a certain age, that expectation was lower among plan members aged 50 and older (34 per cent), compared to 40 per cent of those younger than age 50. The expectation of working in retirement was higher among savers aged 50 and older, with nearly 30 per cent expecting to work at least part-time, compared to 18 per cent of those aged 35 to 49 and 12 per cent of those aged 18 to 34.
Canadian employees also cited a preference for human financial advisors (30 per cent), consistent with their peers in the U.S. (31 per cent) and the U.K. (28 per cent). More than a third (38 per cent) cited one-on-one consultations with advisors as most helpful for retirement education, particularly valued by savers aged 50 and older (42 per cent) and women (40 per cent).
Notably, 32 per cent of respondents indicated their plan doesn’t offer retirement education or that they don’t know what resources are available.
“With many savers expressing uncertainty about investment options, in particular limited awareness of target-date funds and clear demand for personalized guidance, there is a real need for holistic advice that goes beyond investment selection,” said Jessica Sclafani, global retirement strategist at T. Rowe Price, in the release. “Advisors and consultants can play a pivotal role in bridging knowledge gaps, tailoring education to different generations, and helping Canadians balance competing financial objectives.”
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