Retirement becoming an 'elusive dream' for aging Canadians

4 in 10 Canadians nearing retirement have less than $5K saved according to an analysis from HOOPP

Retirement becoming an 'elusive dream' for aging Canadians
Steve Randall

A large cohort of Canadians approaching what should be their retirement years, have only enough saved for a couple of months at best.

Despite a recent survey showing that $1.7 million is required for a comfortable retirement, new research reveals that 44% of Canadians aged 55-64 have less than $5,000 saved and one in five workers have nothing put by at all.

The 2023 Canadian Retirement Survey from Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data found that most respondents in the group approaching retirement (75%) have $100,000 or less saved.

Rising inflation is intensifying concerns about retirement funds and more than half of poll participants said that they will have to delay retirement if the cost of living continues to rise at elevated levels.

More than 4 in 10 said they did not save anything in the past year as everyday expenses stretched their budget.

The report authors say that the precarious state of pre-retirees’ finances boost the case for workplace savings plans.

“The kids are not all right when it comes to retirement saving – we’ve known this for a while – but neither, as it turns out, are their parents,” said  Ivana Zanardo, head of Plan Services, HOOPP. “Declining access to workplace pensions as well as high housing costs have been taking a toll for years. But more recently, high inflation and interest rates have been added to what may be a perfect storm for folks struggling to save.”

Retirement crisis

For those nearing the age when Canadians typically expect to retire, this goal is becoming an increasingly elusive dream the report says.

“In the five years that HOOPP and Abacus Data have conducted this survey, about 70% of Canadians have consistently agreed that Canada is heading for a retirement income crisis,” said David Coletto, CEO, Abacus Data. “These findings for older Canadians suggest a crisis might be looming ever closer if current economic trends continue.”

Younger adults struggling

The cost of living is weakening the ability of younger Canadians to start saving for their later years.

Half of those aged 18-34 say they are being forced to live beyond their means due to inflation and 45% worry they will never have access to a workplace pension.

They are also very concerned about how higher interest rates impact their ability to save for retirement (86%) and reduce debt (83%).

Workplace pensions

The survey shows willingness among Canadians to contribute to a workplace pension:

  • 69% would take a lower salary in exchange for a better (or any) pension
  • 80% agree that reasonable pay cheque deductions are an effective way of helping Canadians save for retirement
  • 78% believe that all employers should be required to contribute in some way towards pensions for workers
  • 76% believe that governments can save money by supporting pensions that are more affordable and 74% agree that if workers cannot access good workplace pensions, they will become a burden on taxpayers