Nearly 30 percent of Canadians nearing retirement are less than confident their retirement savings will suffice to maintain their standard of living, according to data from Statistics Canada.
Toronto (10 September 2008) – The data released yesterday found that 19 percent of respondents aged 45 to 59 are expecting their retirement income will be "barely adequate." Another nine per cent expect it to be "inadequate" or "very inadequate."
The data is contained in two reports focusing on retirement plans of individuals aged 45 to 59 - The retirement plans and expectations of older workers and The retirement puzzle: Sorting the pieces. Data was drawn from the results of the 2007 General Social Survey, which included more than 9,200 respondents who hadn't previously retired and had worked during the 12 months preceding the survey.
One of the authors of the reports, Grant Schellenberg, a senior analyst with Statistics Canada said those who have pension coverage and more years of service are more positive about their retirement financial future. He also noted the same applies to those with RRSP contributions and who own a home.
“So not surprisingly, those with greater financial resources had far more positive assessments of their financial future in retirement than those with fewer financial resources," Schellenberg said.
Other key findings noted in the two reports include:
- Individuals who receive advice are more likely than others to express confidence in the adequacy of their retirement savings to maintain their standard of living in retirement.
- While most Canadians approaching retirement receive financial advice, including advice about retirement planning and programs, almost 3 in 10 do not.
- Individuals who do not receive financial advice are less likely to expect their retirement income to be adequate than those who do receive advice. This relationship remains even when other characteristics such as income, pension coverage and registered retirement savings plan assets are taken into account.
- Of the 7.2 million Canadians aged 45 to 59 in 2007, about 80% or 5.7 million were actively or recently employed and had not previously retired. Of these, 71% received financial advice from at least one source, and 50% received advice from at least one source in the financial industry. Almost 3 in 10 (29%) did not receive financial advice from any source.
- While most individuals approaching retirement said they understood Canada's public retirement income programs, such as the Canada Pension Plan, Quebec Pension Plan and Old Age Security, one-quarter said they did not understand these programs at all.
- A number of factors are associated with the likelihood of receiving financial advice and understanding public programs related to retirement preparations. These factors include an individual's proximity to retirement, financial resources, and demographic characteristics.
- Individuals who are further from their planned age of retirement are less likely to receive retirement-related information. In 2007, for example, 83% of individuals who planned to retire within five years typically received financial advice, compared with 67% of those for whom retirement was 15 or more years away.
- Near-retirees with lower incomes and fewer assets are less likely to receive retirement-related information. For example, 52% of near-retirees with household incomes under $40,000 received financial advice compared with 82% of near-retirees with household incomes of $100,000 or more. Individuals with lower household incomes were also less likely to say they understood Canada's public retirement income programs.
- Immigrants who arrived in Canada since 1990 were less likely to receive financial advice than individuals born in Canada.