How rising living costs threaten retirement savings

FSRA reveals 81% struggle with essentials, hindering retirement plans

How rising living costs threaten retirement savings

A survey commissioned by the Financial Services Regulatory Authority of Ontario (FSRA) has shed light on the growing concern among individuals regarding the affordability of basic necessities and its impact on their ability to save for retirement.

The survey revealed that 81 percent of respondents are prioritizing expenses such as groceries, rent, and mortgages over retirement savings. Additionally, 44 percent of participants reported that the escalating cost of living is a significant barrier to initiating their retirement savings.

Despite the challenging economic circumstances faced by many, the FSRA is advocating for greater awareness and education on retirement savings options.

Andrew Fung, the acting executive vice president of pensions at FSRA, emphasized the importance of planning for retirement despite the immediate pressures of increased living costs.

Fung highlighted the upcoming second annual Pension Awareness Day on February 15th as an opportunity for individuals to contemplate their future quality of life and the crucial role of savings. He suggested that even modest savings can contribute to a more secure future.

The survey also uncovered several alarming insights into the public's perception of retirement. A concerning 20 percent of respondents believe that retirement may not be achievable for them. Only 17 percent anticipate an improvement in their quality of life upon retirement, with a majority expecting it to either remain the same (39 percent) or worsen (43 percent).

Furthermore, 56 percent are unsure of the amount needed to retire comfortably, and 27 percent lack a retirement savings plan. Despite these uncertainties, there is a strong consensus (88 percent) that more efforts are needed to promote retirement savings, and 91 percent agree on the importance of pension education.

An interesting find from the poll is that while 60 percent of people think retirement planning should begin in one's 20s, 61 percent admit to having more knowledge about their favorite TV show than their pension plan benefits.

Fung advises those with access to employer pension plans to familiarize themselves with the benefits and encourages others to explore alternative retirement savings options. Starting early, according to Fung, is the best strategy for achieving financial goals and securing a stable future.

This poll was conducted online by Forum Research from December 7 to 14, 2023, involving 1,000 Ontario residents aged 18 and older.