Six-in-ten Canadians are putting money away for retirement – but most don’t feel they have saved enough to live comfortably in their golden years, according to a new report from the Conference Board of Canada.
Those on the cusp of retirement, ages 55 to 64 are most likely to say they haven’t saved enough, the report found.
Women, and those with lower levels of household income, were also less likely to have put money aside, the survey showed.
“This is a wake-up call that there may not be a soft landing for some people,’ Judith MacBride-King, the lead research director, said in an interview.
The wide-ranging report, called A Survey of Non-retirees and Retirees in Canada: Retirement Perspectives and Plans, is based on a survey of nearly 1,700 Canadians conducted in June, 2014. It explores Canadians’ attitudes about retirement, and their knowledge and planning.
The findings suggest that much more needs to be done to ensure Canadians are ready for retirement, the Conference Board said.
Conventional financial planning advice suggests that Canadians will need anywhere from 55 to 85 per cent of their working income in retirement, depending on their lifestyle.
“I think most people don’t have a good handle on that, and we don’t have a good handle on it in terms of guiding people. There’s a lot of confusion and a lack of knowledge,” MacBride-King said.
“Education and communication on the part of employers and government would be very helpful.”
Nearly 40 per cent of those surveyed said that they don’t know how much they will need to save.
Almost four in 10 Canadians are not saving and nearly 20 per cent of respondents said they will never retire, the survey found.
Over one-third of respondents said they were uncertain when they would be able to leave the labour force. Of these, women, 84 per cent, were more uncertain than men, 70 per cent, when asked about their planned future retirement.
More than one in five respondents has decided to push back the retirement age they had in mind five years ago.
Nearly half, 45.6 per cent, of respondents say they plan to continue to work part-time or on contract after their official retirement. That percentage increases with age, the survey found.
About 60 per cent of those who are 65 years old or older say they will continue working.
On the upside, the report found that just over one-third of Canadians ages 35 to 44 say that planning for retirement is a priority.
“Financial literacy among Canadians is also a concern”, said MacBride-King.
While about half of the survey respondents rated themselves as average, one-in-five described their skills as below average or poor.
This is a particular concern when it comes to women, younger respondents, and those with lower household incomes, all of whom rated their financial literacy skills particularly low, MacBride-King said.
“That was troubling,” MacBride-King said. “Opportunity knocks in terms of our providing some focused or extra attention to educate or bring people up to speed on these subjects.”
Those who earn more than $150,000 annually were over 2.5 times more likely to say they are putting money aside for retirement than those earning under $30,000.
Respondents who report excellent financial literacy skills are anywhere from 4 to 7 times more likely to be confident that they will be able to retire when they want, understand the income they will receive from public pension plans, and know how much they need to save, the survey found.
Survey respondents who have a pension plan at work said they would trade another benefit for increased contribution to their plans. More than half said they would trade training or learning and development opportunities, followed by bonuses, and vacation days.
Just over 31 per cent said they would trade salary increases for a fatter pension contribution, the survey found.
“There’s a solid minority of people who would give something up for a secure future,” MacBride-King said.