More Canadians are saving for retirement than Americans, according to a new survey by Franklin Templeton Investments.
Its 2016 Retirement Income Strategies and Expectations survey, which polled 2,0006 Canadians, 2,019 Americans and 2,003 U.K. residents, found that 70% of Canadian employees have started saving for retirement, a steady increase from 2015, when 63% had starting saving, and 2014, when 60% had started saving.
In contrast, the survey found that 59% of American employees are saving for retirement, continuing a slide from 61% in 2015 and 65% in 2014.
“One possible driver of the rising retirement savings rate among Canadians could be the increasing use of workplace savings opportunities,” said Duane Green, managing director, Canada at Franklin Templeton Investments.
Read: 71% started planning retirement in advance, says survey
The survey also found that 81% of those not yet retired in Canada’s Prairie provinces have started saving for retirement, but only 58% of Quebec pre-retirees have started.
More than half (53%) of respondents in Atlantic Canada are very or somewhat concerned about outliving their assets or having to make major sacrifices to their retirement strategy compared. to only 27% in Quebec. Nationally, 44% of Canadians are concerned about outliving their assets or having to make major sacrifices to their retirement strategy.
“Our survey results show that 26% of Canadians (up from 20% in 2014) are saving for retirement through workplace salary deduction programs,” said Green. “However, despite this positive savings trend in Canada, we tend to see some recurring anxieties about retirement, both from our annual survey and anecdotally in our ongoing retirement discussions with individual Canadians.”
Indeed, some 82% of Canadians are worried about paying their expenses in retirement.
Read: 56% of employers with DC plans think staff are saving enough
“As retirement appears on the horizon, people increasingly start worrying about the financial aspects of it,” said Matthew Williams, head of defined contribution and retirement at Franklin Templeton Investments. “Our survey reveals that an astonishing 92% of Canadians who plan on retiring in the next 11 to 15 years have some concerns about paying expenses in retirement.”
The survey also found that 69% of pre-retirees anticipate spending less in retirement, but only 32% of retirees say their expenses have actually decreased. “So, there is a disconnect between what pre-retirees foresee and the actual experience of retired Canadians,” added Williams.
Read: DC plans need better design and raised contribution rates: report
While Canadian respondents younger than 55 expect that running out of money (33%) will be a bigger concern in retirement than health or medical issues (23%), but this reverses significantly as age increases. More than a third (36%) of those aged 55 to 64 expect health and medical issues to be their top concern during retirement, whereas 19% anticipate their primary concern will be running out of money.
Regardless of specific concerns, the survey found that 72% of Canadian respondents experience varying levels of stress when thinking about retirement savings and investments. Among those who report significant stress and anxiety, 76% don’t currently work with a financial advisor.
This type of individual retirement planning is critical, according to Franklin Templeton, given that 63% of Canadian respondents don’t have a workplace pension plan.
Read: Sounding Board: Gap between DB and DC widens
Among those Canadian respondents who do have a workplace pension plan, complacency can be an issue: 48% of those with a workplace pension don’t know what their personal contribution rate is, and just 12% (vs. 18% in 2015) worked with their financial advisor when selecting investment choices in their workplace pension plan.
“We encourage Canadians to take a more active role in their retirement savings strategies and to engage the help of a financial advisor to create a comprehensive plan,” said Williams.
Read: Franklin Templeton promotes DC and retirement team members