Many Canadians are pausing retirement contributions to focus on tax-free savings accounts and essentials
The rising cost of living is darkening the financial picture for many Canadians, making retirement prospects more out of reach than ever, as reported by The Financial Post.
A report this month from Sun Life Financial Inc. reveals that 75 percent of Canadians believe the cost of living has hurt their retirement savings, while about half worry, they do not have enough saved for retirement.
“There are many factors to think about for Canadians when it comes to saving for retirement,” said Eric Monteiro, senior vice-president of Group Retirement Services at Sun Life, in a news release.
“Planning can significantly affect someone’s ability to retire. Considering what you want your retirement to look like, and building a road map to get there is essential.”
Some Canadians are cutting back on retirement savings to pay for essentials. A February survey by Canadian Imperial Bank of Commerce found that 53 percent of Canadians have paused retirement savings, instead focusing on growing their tax-free savings accounts, which offer more flexibility.
Additionally, a third of respondents do not plan to make any registered retirement savings plan (RRSP) contributions this year.
It is not just those saving for retirement who feel the pinch. A recent TransUnion survey revealed that 48 percent of respondents feel their finances are worse than anticipated, with 30 percent struggling to pay off their bills and loans in full.
The Angus Reid Institute’s recent Economic Stress Index shows that 32 percent of Canadians fall into the “struggling” category, with housing costs as the key driver of financial stress.
Sun Life recommends being digitally engaged with retirement savings, which means logging into an online retirement account at least once a year. Those who are digitally engaged have an average balance that is 230 percent higher and contribute 61 percent more to their accounts.
“It is important that people not only prepare for retirement but feel confident in the decisions they have made,” Monteiro said.
“Those who regularly log in online see the long-term benefits of embracing digital tools. These numbers paint a vivid picture of how technology can empower people to take control of their financial future.”
