Workers’ retirement savings falling short

The majority of Canadians are nowhere near reaching their retirement goals, finds a survey by the Canadian Payroll Association released today.

73% of Canadians say they have put aside less than a quarter of what they would need in retirement.

Read: TFSAs reduce retirement income risk

Among workers 50 and older, 47% say they still have less than 25% of the savings needed.

For those who had originally had a retirement date in mind, 35% say they’ll now have to work longer—on average five more years—than they planned.

The amount of cash people feel they need before they can retire has been going up. Now 30% feel savings of $500,000 to $1 million will be enough versus 34% in 2012, while more think between $1 million and $2 million will be needed 35% this year, compared to 28% last year.

Read: Longer life spans threaten pensions

The rate people are saving at remains low, as 45% are putting away 5% or less of their pay. Financial planning experts generally recommend a retirement savings rate of 10% of net pay.

Instead of saving, 40% of employed Canadians are spending all or more than their net pay. This is most common in Atlantic Canada, Manitoba, Saskatchewan and Ontario.

The survey did have some good news: fewer employees are living pay cheque to pay cheque. Although 42% would still be in financial difficulty if their pay was delayed by even a week, it’s down from 47% last year.

Read: Older workers forced into part-time jobs

Staff

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