Canadians ahead of Americans on retirement saving

Canadians ahead of Americans on retirement saving

Canadians ahead of Americans on retirement saving Do not adjust your screen: in what marks a remarkable turnaround, a larger percentage of Canadians are actually saving for retirement than Americans.

A survey, entitled 2016 Retirement Income Strategies and Expectations (RISE), by Franklin Templeton Investments, has revealed that 70 per cent of pre-retirement Canadians have already started saving – representing a leap from 63 per cent in 2015 and 60 per cent in 2014. Meanwhile, just 59 per cent of pre-retirement Americans have started saving: continuing a slide from 61 per cent in 2015 and 65 per cent in 2014.

So what has prompted the reversal?

According to Duane Green, managing director at Franklin Templeton Investments Corporation, one possible driver is the use of workplace savings opportunities among Canadians.

“Our survey results show that 26 per cent of Canadians (up from 20 per cent in 2014) are saving for retirement through workplace salary deduction programs,” he said. “However, despite this positive savings trend in Canada, we tend to see some recurring anxieties about retirement, both from our annual survey and anecdotally in our ongoing retirement discussions with individual Canadians.”

According to the survey, 82 per cent of Canadians have concerns about paying their expenses during their retirement years – indeed there are worries that retirement expenses will peak well ahead of actual retirement.

“As retirement appears on the horizon, people increasingly start worrying about the financial aspects of it,” said Matthew Williams, head of Defined Contribution and Retirement at Franklin Templeton Investments Corp. “Our survey reveals that an astonishing 92 per cent of Canadians who plan on retiring in the next 11 to 15 years have some concerns about paying expenses in retirement.”

According to the survey, pre-retirees’ perceptions and the actual spending habits of those in retirement are also at odds. Williams highlights survey data indicating that “69 per cent of pre-retirees anticipate spending less in retirement, but only 32 per cent of retirees say their expenses have actually decreased. So, there is a disconnect between what pre-retirees foresee and the actual experience of retired Canadians.”

Perhaps one of the most important notes from the survey for financial advisors is that among those who said they suffered from anxiety and stress about their retirement investments and savings, 76 per cent are not currently working with a financial advisor: perhaps suggesting that there is a significant market to capitalize on.

The numbers also demonstrate the value of professional advice when it comes to making retirement planning a priority:  91 per cent of pre-retirees who work with a financial advisor have started saving for retirement versus 52 per cent of those who have never worked with an advisor.

Later in the week, Wealth Professional will examine the figures in more depth and look closely at the lessons that can be learned by financial advisors. However, if you have any thoughts as an immediate reaction to the survey results please leave a comment below.