On average, Canadians expect to retire at around age 60: report
Saving for retirement is far from being the top concern for Canadians at the moment, according to a recent report from the Canadian Imperial Bank of Commerce (CIBC).
Overall, Canadians are favouring the Tax-Free Saving Account (TFSA) over Registered Retirement Savings Plans (RRSPs) and other longer horizon investment vehicles, finds the report.
That’s because nearly six in 10 (57%) of Canadians say they are more concerned with meeting their current needs vs. saving for their future. And 42% of Canadian investors are continuing to focus their strategies for achieving predictable returns versus aggressive growth.
Over two-thirds (67%) of Canadians have some type of investment product. However, among investors that own both an RRSP and a TFSA, 45% say they chose to contribute more to their TFSA. The majority (53%) of those investors also agree that a TFSA contribution makes more sense for their financial situation right now as it allows them to withdraw their money tax-free at any time vs. a locked-in RRS.
"The preference for short-term liquidity and stable returns suggests many Canadians are focused on today and less so on long-term accumulation of wealth or retirement," said Carissa Lucreziano, vice-president for financial and investment advice, CIBC.
Over six in 10 (63%) Canadians with household investable assets of at least $100,000 are somewhat (49%) or strongly (14%) confident in their retirement prospects, according to a previous report from LIMRA.
Are Canadians saving enough for retirement?
Canadians expect to retire at around age 60 on average, according to CIBC’s survey of over 1,100 Canadian adults who hold or have managed investments, conducted Jan. 31 to Feb. 1, 2024.
Just 43% of RRSP holders have already made their contribution for the 2023 tax year, while 15% of plan holders have not contributed yet, but plan to do so. The stated 2023 RRSP contribution amount is $5,642.
One third of RRSP holders are not planning to make contributions this year.
Despite this, over half of Canadians admit to either not being able to save, or not knowing whether they are saving enough for retirement.
And nearly six in 10 (57%) worry they may run out of money in their retirement years. Over three in 10 (31%) say they have delayed their savings plans because of inflationary pressures and 23% say they haven't started saving for retirement at all.
While 53% of Canadians aged 50 years or older who are not yet retired report their financial situation is strong, 24% rate their current financial situation as poor, according to a previous study from the Ontario Securities Commission (OSC).
"Planning for both short and longer-term ambitions can help individuals move beyond their immediate needs and envision how they can live for today, save for the future, accumulating wealth over time to support their retirement years,” said Lucreziano.
Employers can differentiate themselves from the rest by offering personalized benefits to workers, said Joy Sloane, a senior vice president in global insurance brokerage Hub International’s employee benefits consulting, via Benefits and Pensions Monitor (BPM). Here’s how:
- Start with the data. Figure out what is happening in your organization and what your people need.
- Offer personalization. One size fits none. Offering personalized benefits helps you adapt to the needs and wants of individual employees.
