Roughly one in five Canadians age 50 and older doesn’t know how much they have saved for retirement, according to the results of a new study.
The Investor Education Fund’s (IEF) Home Equity as a Source of Retirement Income study revealed that 19% of Canadians in the demographic aren’t keeping track of how much they have saved in their retirement accounts. In addition, half of respondents believe they will spend all their retirement savings within the first decade after leaving the workforce.
“That Canadians aren’t saving enough for retirement is nothing new, but it is unsettling to learn that homeowners approaching retirement age are so unprepared because they are a comparatively well-off group,” says IEF president Tom Hamza.
The study examined household wealth locked into home/property value, home-related debt during retirement and home equity as a source of income during retirement. Other highlights include the following:
- One-quarter (24%) of Canadian households have no idea how much they will need to draw from their savings/investments every year after retirement, including their company pensions.
- Almost half (48%) of the respondents have never thought about selling their home as a way to generate retirement income.
- One-quarter (24%) of homeowners expect to have debt on their principal residence after they retire, with a median debt of $71,000. Of this group, almost one-half (49%) expects to pay the debt from their retirement income, and one-quarter (27%) doesn’t know how they will pay it off.
“Retiring with debt puts extra strain on your income. If you go into retirement with inadequate savings in the first place, you may be on shaky ground,” says Hamza. “Without thorough planning, you may face some tough financial decisions.”
Hamza says Canadians should look to tools, such as the IEF’s new retirement cash flow calculator—which estimates how long your investment nest egg will last in retirement—to help them plan ahead.