Canadians' financial priorities shift as they look to their financial future

RBC poll reveals the impact of inflation on Canadians, RRSP usage, and shifting investment focus

Canadians' financial priorities shift as they look to their financial future

Canadians looking to their financial future are contending with new uncertainties related to the impact of rising inflation on their retirement savings. With inflation running at its hottest pace in 30 years, the scourge of rising prices has emerged as one of the top three concerns Canadians have about retirement for the first time in more than a decade, according to RBC's annual Financial Independence in Retirement Poll.

The poll, which took responses from 2,000 adult Canadians aged 18 years old and above, revealed respondents’ top three concerns about retirement finances were having enough savings (47%), maintaining their standard of living (36%), and the effect of inflation on their retirement savings (29%).

The findings show that inflation also limits Canadians' ability to increase savings, pushing up fixed costs even further. Twenty-nine per cent of survey respondents cited it as one of the main barriers to savings, with the largest proportion (40%) seen among those between the ages of 25 and 34. The majority of this young age group (85%) are also most worried about trying to balance today’s and future savings.

Nowadays, nearly half (48%) of Canadians have a financial plan, and the large majority of them (86%) say that plan makes them feel positive about their financial future.

A strong indicator that Canadians want to recommit to their financial future is how RRSPs are making a resurgence. After a seven-year downtrend (and last year's record low of 46%), RRSPs have recovered and now more than half (53%) of Canadians have RRSPs to save and invest for retirement. increase. Additionally, more Canadians own mutual funds (36% vs. 30% ago), stocks (20% vs. 14%) and ETFs (11% vs. 7%) within these RRSPs.

Another key finding from the survey is a percentage increase of Canadians building investment portfolios from 25% last year to 28% (10 points higher than they were 10 years ago). Young investors aged 25-34 display the most interest in building these portfolios (32%). Since the beginning of the pandemic, they have also focused more on the value of their investments (22%), with nearly half (48%) willing to pay a fee for investments with higher return potential.

"When assessing value, investment performance after fees is what really matters. It's encouraging to see that younger Canadians understand how crucial this is in achieving your [their] financial future," said Stuart Gray, Director of Financial Planning Centre of Expertise.