Canadians’ financial stress on the rise: surveys

The burden of inflation is leading to increased financial stress, but financial planning can provide some relief, based on the findings of two recent surveys.

FP Canada’s 2023 Financial Stress Index, based on a survey of over 2,000 Canadians, found that money remains the top source of stress (40% of respondents) for the sixth consecutive year, surpassing personal health (23%), relationships (17%) and work (16%).

Rising inflation was a pressing concern, with the increasing costs of goods and services, particularly gas and groceries, contributing to Canadians’ financial stress. Almost half of respondents (48%) had less disposable income compared to the previous year, up from 39% in 2022.

Saving was a challenge, with retirement savings (35%) and saving for major purchases (32%) being areas of growing concern.

Further, more than one-third (36%) of respondents experienced mental health challenges related to financial stress.

Financial stress also took a toll on sleep, with 48% of respondents reporting sleep disturbances due to money worries, compared to 43% last year.

However, a greater proportion of respondents who worked with professional financial planners said they felt hopeful about their financial futures (59%) compared to those who didn’t (46%).

Respondents who worked with financial professionals were less prone to money-related stress, sleep loss and financial regrets. Even when money was the primary source of stress, over half (55%) of respondents who worked with financial planners said financial stress had no negative impact on their lives, compared to 42% who didn’t work with planners.

A report from Fidelity Investments Canada further underscored the value of financial planning and professional advice in navigating retirement challenges.

The Fidelity Retirement Report for 2023 found that respondents were feeling less optimistic about retirement, with 73% saying the felt positive about their outlook in retirement, down from 80% in 2018.

The rising cost of living was the primary obstacle holding respondents back from retiring. As a result, 42% of respondents reported saving less compared to the previous year. In another survey from the Healthcare of Ontario Pension Plan, 44% of respondents said they haven’t set any money aside for retirement in the past year, an increase of 6% year over year.

The Fidelity report found that Canadians who had a written financial plan felt significantly more prepared both financially (91%) and emotionally (85%) for retirement compared to those without a plan (58% and 69%, respectively). Of those with written plans, 82% worked with a financial advisor to build the plan.

Yet, less than one-third (28%) of respondents had a written plan, the report said.

In a release, Peter Bowen, vice-president of tax and retirement research with Fidelity, said working on a financial plan can provide hope amid persistent negative headlines.

“Groceries, energy bills, clothing — these are just some of the everyday items affected by inflation, holding Canadians back from retiring when they would like to,” Bowen said. “The value in having a written financial plan is a theme we see year after year, and yet the majority of Canadians don’t have one.”

Fidelity’s annual retirement report was conducted among 1,920 Canadians between March 1 and March 13. Results are accurate to +/- 2.31 percentage points, 19 times out of 20.

FP Canada’s annual financial stress index was conducted online between March 29 and April 7 using Leger’s online panel. Online surveys can’t be assigned a margin of error because they don’t randomly sample the population.