Canadians say they need around $2 million for retirement, can they reach it?

BMO survey looks at RRSP usage and the expectations of future retirees

Canadians say they need around $2 million for retirement, can they reach it?
Steve Randall

Retirement for Canadians is less about slowing down and taking things easy, with better health and life expectancy than previous generations. But an active lifestyle needs funding.

A new survey from BMO reveals that respondents believe they need $1.7 million to fund the retirement they expect, rising to $2.1 million among the core-working-age millennials. However, is that achievable with the levels of retirement savings reported?

Almost two thirds of poll participants said that the current economic conditions have reduced their ability to save and 37% said they are saving less towards their retirement.

The youngest cohort of adults may feel they have time on their side – 38% of Gen Zs said they are not saving anything towards retirement – but they should perhaps take a lesson from Boomers with 44% of this generation reporting they have to keep working for longer than planned to offset their savings shortfall.

This is exacerbated by the retirement age desired by younger Canadians. While the average age respondents plan to retire is 62, they would like to stop working at 55, while millennials would prefer 53 and Gen Z want to retire at 50.

Recently, Curtis Holt-Robinson and Tara Lalehparvar are the co-founders of Skyward Financial, shared their insights with Wealth Professional into how to keep retirement in mind for millennial and Gen Z clients.

BMO’s analysis of RRSP balances found that average savings fell back almost to pre-pandemic levels in 2023 ($113,070) having spiked in 2021 ($141,923) and 2022 ($144,613). The average was $111,929 in 2019 and $112,295 in 2020).

On the plus side, more than six in ten respondents contributed to their RRSP in 2023 or were planning to do so at the time of the survey by Pollara Strategic Insights (November 3rd – 8th, 2023). The average contribution increased last year to $6,513 from $5,753 in 2022.

As with most things financial, there is a gap between the retirement savings expectations of men and women.

While women believe they will need $1.3 million saved compared to men’s $2 million expectation, only 56% of women are confident in meeting their retirement goals compared to 67% of men.

Getting advice

While there could be some challenges for some taking part in the research in retirement with the savings and at the age they would like, there is a strong desire to get professional help to do so.

Even though 77% said that current economic conditions are negatively impacting their finances, 55% think financial advice is more important now.

For those working with an advisor, 82% say it’s helping them to reach their goals, 67% say their advisor is helping them see financial growth, and 75% appreciate having a personalized financial plan.