A new survey from the Bank of Montreal is shedding light on Canadians’ concerns about the economy and the impact it will have on retirement plans.
Chelsea Renaud is just starting a family, but says retirement savings are on her mind.
“You need to plan for the future, send the kids to school, college, everything like that. So, definitely a bit of a concern,” she told CTV News.
The Calgary mom and teacher isn’t the only one.
According to the BMO survey, Canadians now believe they need $1.7 million in savings, including things like the Canada Pension Plan, in order to retire.
That’s a 20 per cent increase from 2020, when respondents expected to need $1.4 million.
“It’s a reflection of how Canadians are feeling. We’ve just gone through a pandemic and now it’s combined with that and going through an environment where we have high interest rates and rising prices,” said Caroline Dabu, BMO’s head of wealth distribution and advisory services.
“That is leading Canadians to feel they have less confidence around saving and investing towards their retirement goals and certainly feeling that they’re going to need more.”
Canada’s annual inflation rate hit a high of 8.1 per cent in June 2022 and has since fallen to 6.3 per cent as of December 2022.
Across all age groups, 74 per cent of respondents said they are concerned about the current economic situation.
Fifty-nine per cent said conditions like high inflation have affected their confidence in meeting their retirement goals.
Some Calgarians, like Sandra Wigg, agree.
“Do I have enough? And at my age, you know, is there a possibility to make sure that I can retire the way I want to?” she said.
Others aren’t too concerned.
“I grew up when inflation was at 12 or 15 per cent and, you know, people seemed to survive at that time,” Bliss Aime said.
“I’m not saying that inflation is not an issue, but I think at some point, our lifestyle has to change in relation to what we spend money on.”
Just 44 per cent of Canadians surveyed are confident they will have enough money to retire.
Under a quarter (22 per cent) plan to retire between the ages of 60 and 69, with an average age of 62.
Faisal Karmali, senior wealth advisor and portfolio manager with the Popowich Karmali Advisory Group, says retirement planning all comes down to the individual.
“Looks at your current situation, where you want to be when you retire and how you’re going to get there. And that number, whatever it may be, $1.7 million or anything much lower or much higher, all depends upon you as the individual,” he said.
Karmali recommends people meet with a financial advisor to come up with a written plan that takes into account their lifestyle and retirement goals so they can save accordingly.
He also reminds people that retirement has many phases, so it’s important to save for the fun years, the slow years and potential long-term care needs.
Renaud is hopeful the current economic conditions will turn around.
“Hopefully, wages and everything else will go up and we’ll be able to keep on track,” she said.
The BMO survey was conducted between Nov. 4 and 7, 2022, by Pollara Strategic Insights via an online survey of 1,500.
The survey’s margin of error is plus/minus 2.5 per cent, 19 times out of 20.