Two-thirds (67 per cent) of Canadians say they’re very concerned about how Canada-U.S. relations, along with the cost of living (67 per cent) and general economic uncertainty (65 per cent), will impact their retirement savings, according to a new survey by the Healthcare of Ontario Pension Plan.
The survey, which polled more than 2,000 Canadians, found as a result of the ongoing U.S trade war, a fifth (22 per cent) said they’re putting more money aside in savings and 18 per cent said they’ve stopped contributing to their savings.
This economic uncertainty is driving interest in defined benefit pension plans, says Jennifer Rook, vice-president of strategy, global intelligence and advocacy at the HOOPP.
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Indeed, the survey found 88 per cent of respondents agreed they’d contribute nine per cent of their salary to be part of a DB plan. In addition, two-fifths (41 per cent) of those who don’t have a DB or defined contribution pension plan said it’s unlikely they’ll ever have a workplace pension plan. And three-quarters (73 per cent) of all respondents said they believe regardless of economic conditions, companies could afford to offer workers good pension plans if they wanted to.
“I think what [those findings] are speaking to is [retirement] is one piece of uncertainty in people’s lives and they want [employers] to help them manage that.”
The current economic and political landscape is also impacting Canadians’ mental health, says Rook, noting generation Z is particularly concerned about their financial future. “We have 53 per cent of respondents aged 18 to 34 saying their mental health has been impacted by geopolitical developments. That cohort, in particular, feels very out of sorts and they’re looking for anything their employer can do to provide some peace of mind for them.
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“We’re having all these big discussions as a country and, if we could have include retirement savings as part of those big discussions, I think it would be helpful for Canadians and lower their anxiety.”
More than half (55 per cent) of working Canadians said they’re unable to save for retirement because they’re living paycheque to paycheque and 50 per cent said they’re concerned that any current or future savings won’t last long enough in their retirement.
Among pre-retirees, two-thirds (66 per cent) said they’ll need to continue working in their retirement to support themselves financially. And while nearly half (47 per cent) said saving for retirement is one of their top financial priorities, the survey found a third said they’ve saved less than $5,000.
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The survey also found many Canadians are relying on home ownership as a key part of their retirement planning. More than two-fifths (44 per cent) of current homeowners said they’re relying on the sale of their home to set themselves up for retirement and a third said they’d remortgage their homes and use the funds for retirement.
However, two-thirds (65 per cent) of homeowners said they’re worried they won’t be able to pay off their mortgage in time to retire when they want to and 62 per cent of respondents who don’t yet own a home said they’re worried that current interest rates will hinder their ability to ever become homeowners.
“[Homes] are a very volatile asset and very sensitive to interest rates,” says Rook. “Unfortunately, we’re seeing people having to pick between saving for [a home] versus retirement [and] I think people need to consider that, if they want peace of mind for retirement, they need a retirement savings plan.”
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