A newly released report from BMO Wealth Management shows 55 per cent of Canadians have a positive outlook on retirement. However, only 36 per cent of respondents in the Prairie provinces said they felt prepared for the unexpected during their golden years.
Fifty-nine per cent of Canadians said they miss or will miss income from their working life during retirement. Sixty-seven per cent see running out of money is the biggest challenge in retirement.
Many financial experts recommend a continuous savings plan, where money is deducted on a regular basis.
“It’s a forced savings habit and it’s almost like an expense,” said Chris Buttigieg, senior manager of wealth planning strategy with BMO.
“Once we get in that mindset of savings as an expense, then it takes care of itself,” Buttigieg said.
Conventional wisdom suggests the earlier people start saving, the better.
“The younger generation’s risk tolerance seems to be a little bit lower than their parents or their grandparents. I think part of it is there’s so much volatility now,” said Kevin Haakensen, portfolio manager and advisor with Prairie Wealth Management.
Though the last day to make RRSP contributions is Feb. 29, Haakensen said people making less than $45,000 are typically better off putting money in a Tax-Free Savings Account.
The exception is when people have an employer pension – something that’s becoming less frequent, according to a study by the Broadbent Institute. The think-tank describes itself as an “organization championing progressive change.”
The study suggests poverty is increasing among seniors and Canadians are retiring with “inadequate” savings. Only 15 to 20 per cent of middle-income Canadians without employer pensions have saved “anywhere near enough” for retirement, according to the study.