Three-quarters (75 per cent) of Canadian adults aged 55 to 64 have $100,000 or less in savings and 44 per cent have less than $5,000, according to a new survey by the Healthcare of Ontario Pension Plan.
The survey, which polled 2,000 Canadian employees, found 44 per cent haven’t set aside any money for retirement in the past year, a six per cent increase from 2022, while 32 per cent said they’ve never set aside money for retirement.
“It appears a retirement crisis is looming and, with a prolonged period of rising inflation and interest rates, Canadians of all ages are finding it much harder to save for retirement,” says Ivana Zanardo, head of plan services at the HOOPP. “We believe we have a responsibility to raise awareness of why good pensions like HOOPP are valuable for everyone. Our research has shown Canadians are worried about the impending retirement crisis and they know the solution — better access to workplace retirement savings plans.”
According to the survey, the cost of living remained the No. 1 concern for Canadians (70 per cent, up 15 per cent since 2021), followed by income keeping up with inflation (66 per cent, up 17 per cent since 2020) and having enough money for retirement (59 per cent, up 10 per cent since 2021).
A third (33 per cent) reported falling behind in their standard of living, a percentage that increases among pre-retirees (38 per cent). If inflation continues to rise, more than half (54 per cent) of those aged 55 to 64 agreed they’ll have to push their target retirement date.
In addition, more than two-thirds (69%) of respondents said they’d prefer a slightly lower salary and any — or a better — pension than a higher salary and no — or a worse — pension. This percentage increased to 51 per cent among employees aged 35 and younger and to 82 per cent among respondents aged 55 to 64.
“In the five years we’ve done this study, a consistent majority have told us they’d take less pay for a pension,” notes Zanardo. “And what’s interesting is that this finding held true even in a year where we’ve seen inflation and interest rates continue to rise.”
Half (51 per cent) of Canadians aged 18 to 34 agreed they live beyond their means, compared to only 31 per cent of those aged 35 and over. Among these respondents, their No. 1 concern was the impact of higher interest rates on their ability to save money (91 per cent), to save for retirement (86 per cent) and to reduce debt (83 per cent).
“The research we did last year really focused on the impact that inflation and high interest rates are having on this group,” said Zanardo. “Older Canadians had housing as an option for a retirement asset, but it’s no longer an option for many young people. Providing workplace retirement savings plans is the main way employers can help. We know saving early and saving often is the key to retirement security — and there’s no more effective way to do that than through your employer.”