Canadians’ retirement confidence drops as life expectancy rises

Almost half (45 per cent) of Canadians are confident they’ll be able to maintain their standard of living in retirement to a life expectancy of 85, according to a new study by market research firm Mathew Greenwald & Associates Inc. and Cannex Financial Exchanges Ltd. 

The survey, which questioned more than 1,000 Canadians aged 55 to 75 with more than $100,000 in investable assets, found that as expected longevity increased, confidence decreased. For example, 58 per cent of respondents said they’re not confident they can maintain their standard of living to age 90.

Read: Canada facing $13.4-trillion retirement savings deficit by 2050

Reflecting those concerns, 80 per cent of respondents to the survey rated guaranteed income products, such as annuities, as a highly valuable supplement to government-sponsored retirement plans. That compares with 60 per cent who said so in 2015.

“Concerns about being able to afford retirement appear to be universal, whether we are talking about Canadians or their American counterparts,” said Doug Kincaid, senior research director at Greenwald & Associates, in a news release.

A similar survey has tracked the issues in the United States since 2014. “Although they have a more robust safety net in retirement, Canadians are similarly worried about meeting their financial needs and see greater value in guaranteed lifetime income.”

The Canadian survey also found the majority of people approaching retirement anticipate a substantial cut in income when they retire and believe what they receive will decline over time. Some 42 per cent of respondents expect their highest expenses to occur early in retirement. In addition, more than a third (35 per cent) of women expressed significant concern about outliving their retirement savings. That compares to 20 per cent of men.

The survey found the top retirement concerns among Canadian respondents include retirement savings not keeping up with inflation (48 per cent), low interest rates (47 per cent), not earning as much as possible on investments (46 per cent), losing money during downturns in the stock market (46 per cent), not being able to afford long-term care expenses (45 per cent), outliving savings (43 per cent) and not having money for an emergency (43 per cent).

Read: 90% of Canadians would pay more for predictable retirement income: survey