Nearly half of Canadians unable to put aside money for retirement in the past year alone
Rampant inflation and rising interest rates have caused a decline in the financial wellbeing of Canadians and placed their retirement readiness at risk, according to the 2023 Canadian Retirement Survey by the Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data.
The results of the survey of 2,000 Canadians found that nearly half (44%) were unable to put aside money for retirement in the past year alone, a jump of 6% from the previous year’s data.
Canadians grew concerned about the cost of living (70%), how to keep up with inflation (66%), and if they saved up enough money for their retirement (59%). More than half (69%) of Canadians would even accept lower pay for better pension.
“The number of Canadians willing to sacrifice pay for pension has held firm over the five years that we have done this survey, including now, in a year when you might expect immediate financial needs to prevail,” said Ivana Zanardo, Head of Plan Services at HOOPP.
“It demonstrates the degree to which Canadians value workplace retirement savings plans, and their willingness to do their part to get one.”
HOOPP’s survey found that Canadians from all age groups struggled to set aside retirement funds. Notably, trends among the 55-65 age group suggested that retirement may become a pipe dream for many older Canadians, an age where ideally one has prepared for the transition into retirement.
Nearly half (44%) of the non-retired Canadians in this age group had less than $5,000 in savings, while 75% had $100,000 or less in their savings accounts. More than half (54%) said that if inflation continued to rise, they needed to move their target retirement date.
“In the five years that HOOPP and Abacus Data have conducted this survey, about 70% of Canadians have consistently agreed that Canada is heading for a retirement income crisis,” said David Coletto, CEO, Abacus Data.
“These findings for older Canadians suggest a crisis might be looming ever closer if current economic trends continue.”
The outlook for younger Canadians in the 18-34 age group remained bleak. 51% said they lived beyond their means and not by choice. In this age group, 67% were concerned about their income as they keep up with rising inflation, 65% worried about housing affordability, and 45% questioned if they would still have access to a workplace pension.
Younger adults grew concerned about how high interest rates will affect how much they can save up for retirement (86%) and reduce their debt (83%).
“The kids are not all right when it comes to retirement saving – we’ve known this for a while – but neither, as it turns out, are their parents,” said Zanardo.
“Declining access to workplace pensions as well as high housing costs have been taking a toll for years. But more recently, high inflation and interest rates have been added to what may be a perfect storm for folks struggling to save.”
The survey showed that Canadians had thought of ways to navigate the current climate including reasonable amounts of pay deductions (80%), employers being required to give contributions (78%), and access to more affordable pensions (76%).
