While Canadians nearing retirement age have seen a doubling in the median value of both their assets and net worth since 1999, the prospect of a comfortable retirement remains out of reach for many employees, according to a new report by the C.D. Howe Institute.
It found a quarter of Canadians aged 45 to 64 have no private retirement assets. Among Canadians who aren’t participating in employer-sponsored pension plans, their median wealth accumulations in registered retirement savings plans and tax-free savings accounts remains low.
“These realities suggest that a minority of the future elderly may have trouble maintaining their standard of living in retirement,” said Bob Baldwin, chair of the pension policy council at the institute, in a press release.
Low workplace pension participation rates in the labour force — particularly among small- and medium-sized employers — is a chronic problem, noted the report, adding clear objectives, as well as provincial and federal governmental coordination, are required to develop solutions.
In addition, the average Canadian must now save more money for retirement due to the decline in interest rates and increases in life expectancy, said Baldwin. “Improvement in the median wealth accumulation of Canadians approaching retirement age is good news. But its ability to translate into higher retirement income will be tempered by the higher costs of a dollar of annuity income.”