Canadians divided on outlook for retirement

There are stark differences among Canadians on the stress and anxiety that comes from thinking about their retirement savings, shows a survey for Franklin Templeton.

When asked how they believe their retirement will differ from previous generations, Canadian pre-retirees were pretty evenly split, with 31% of respondents indicating that they believe it will be better, 36% indicating that they believe it will be worse, and 32% believing it will be similar. Pre-retirees in the 45 to 54 age range expressed the greatest concern, with 41% expecting their retirement to be worse than previous generations and only 26% expecting it to be better. Pre-retirees aged 18 to 24 showed more optimism, with 37% holding a better outlook for retirement.

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“A variety of factors could be contributing to those concerns, including the increasing inability of government pensions and programs such as Old Age Security, to contribute to a secure retirement; lingering fears from the 2008 recession; and—for the millennial generation in particular – fears about employment in both the short—and long-term, and the impact that will have on their ability to contribute to RRSPs at an early age,” says Philip Bensen, senior vice president, Canada, for Franklin Templeton Investments.

When asked how they would characterize the stress and anxiety that comes from thinking about their retirement savings and investments, respondents aged 18 to 24 and those aged 65 and over indicated the lowest levels of stress, with 40% and 45%, respectively, citing that their retirement savings and investments do not cause any stress or anxiety. Those indicating the highest levels of stress were respondents aged 45 to 54, with 78% indicating at least some level of stress and 38% labelling this stress as moderate or significant.

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When asked what they expect to be their top concern during retirement, pre-retirees aged 45 to 54 selected running out of money as well as concerns about health and medical issues—with each representing the top concern of about a third of respondents in this age range. In the 55 to 64 pre-retiree age range, health and medical issues (39%) began to exceed running out of money (32%) as the top concern.

While “retire later” was the top response (66%) from Canadian pre-retirees who were asked what they would do if unable to retire as planned due to insufficient income, 29% of retired survey respondents indicated that they did not retire by choice.

The survey also uncovered some potential missed opportunities for investors based on the vehicles that make up their retirement savings plan. Specifically, of the 22% of Canadians who identified GICs and money market funds as products that make up part of their retirement plan, half (51%) claim these investments are the primary (22%) or secondary (29%) vehicles held in their retirement plan—a concern given that, in today’s rate environment, such investments tend to yield negative results after inflation is taken into account.

Read: Almost 90% to rely on CPP

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.