Although more Canadian employees have been able to increase their general savings this year, the rate at which they are saving for retirement is still low.
A new survey from the Canadian Payroll Association (CPA) found that 40% of employees who were trying to save more were able to do so in 2011, whereas that number jumped to this 66% in 2012.
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Missing the mark
However when it comes to retirement savings, the survey results indicate Canadians still aren’t putting away enough. Almost half (46%) of respondents said they put away only 5% or less of their pay for retirement. Financial planning experts generally recommend a retirement savings rate of 10% of net pay.
Asked how close they are to their retirement goal, 73% of respondents indicated they have saved less than a quarter of what they wish to accumulate. Of particular concern is the finding that among employees closer to retirement (50 and older), 45% report that they are less than a quarter of the way to their retirement savings goal.
The survey results also suggest that Canadians are being more realistic about their retirement needs. Fewer now feel that savings of $500,000 to $1 million will be sufficient to live comfortably in retirement (34% of respondents this year versus 42% in 2011), while more think a nest-egg of between $1 million and $3 million will be needed (38% this year versus 27% last year).