Saturday, October 24, 2015

Only 48% of Canadians saving for retirement

According to a survey of 1003 Canadians done by IPSO Reid for Global News, younger Canadians are not saving anything for retirement, and this should cause us some concern as it is causing them concern. Canadians believe themselves to be financially literate, and know that they should be saving for retirement, and are stressed out by the fact they cannot save.  There are many reasons for the inability to save, but lack of financial smarts is not one of them.  One of the main reasons people don't save is because they do not have the income needed to meet their needs. As a result people borrow more (Canadian household debt is rising) and savings are not put aside. The good news is that as we get older we start putting more away for retirement.

Only one half (48%) of Canadians agree (18% strongly/29% somewhat) they’re currently saving for their retirement, while the other half (52%) disagree 28% strongly/24% somewhat) that they are, according to a new Ipsos Reid poll conducted on behalf of Global News – the first in a series of polls focused on Canadians and their finances.

Those aged 35 to 54 (56%) are most likely to be saving for retirement, followed by those aged 55+ (48%), many of whom would already be retired. However, only 37% of those under the age of 35 are currently saving for their retirement, perhaps believing they have plenty of time left to save. Men (52%) are more likely than women (44%) to be saving. Regionally, Quebecers (39%) and British Columbians (44%) are by far the least likely to be saving, while those in Ontario (50%), Atlantic Canada (53%), Alberta (55%) and Saskatchewan and Manitoba (57%) are most likely.

The data reveal that it’s not just retirement savings that are being neglected. Only half (48%) of Canadians say that they have enough money saved up to cover three months’ worth of expenses without working. Not surprisingly, those earning $100,000 or more in household income per year are most likely (67%) to have this amount saved, followed by those earning $40K to $60K (51%), $60K to $100K (43%), and less than $40K a year (35%). Ontarians (55%) are most likely to have enough saved to cover three months of expense without working, followed by those living in Alberta (50%), BC (47%), Saskatchewan and Manitoba (46%), Atlantic Canada (46%) and Quebec (38%).

Sources of Financial Stress
For many Canadians, money and finances appear to cause a good deal of stress – and saving for retirement is among the list financial responsibilities that are causing the most stress:
  • Nearly half (45%) say that their income or keeping a steady income causes them stress (20% a lot of stress/25% some stress), with British Columbians (49%) stressing the most.
  • Four in ten (40%) are stressed about saving for retirement (17% a lot/22% some), with BC residents in the lead (45%).
  • Four in ten (37%) confess that saving for big-ticket items, like a car or a down payment for a home, causes them stress (14% a lot/22% some), with Ontarians (40%) being most stressed about this.
  • One in three (33%) are stressed (15% a lot/18% some) about making bill payments on time (led by Quebecers (37%).
  • One in three (31%) say their credit card debt causes them stress (14% a lot/17% some), led by those in BC (35%).
  • Three in ten (30%) say their mortgage/rent payment causes them stress (13% a lot/17% some), with Albertans (36%) and British Columbians (36%) stressing most about this.
  • One quarter (24%) are stressed (8% a lot/16% some) about paying for dependents like children or aging parents, particularly in Ontario (28%).
Financial Planning and Literacy
With so many lacking confidence in this matter, it’s perhaps not surprising that only one half (50%) of Canadians say they have a financial plan that they follow. Another one in ten (11%) have a financial plan but they don’t follow it, which leaves roughly four in ten (39%) with no plan. Residents of Ontario (55%) are most likely to have a plan and follow it, followed by those living in Atlantic Canada (53%), BC (52%), Alberta (52%), Saskatchewan and Manitoba (47%) and Quebec (43%). Those with a household income of $100,000 or more are most likely to have a plan (57%), while those with a household income of less than $40,000 (42%) are least likely to have one.

Three quarters (75%) of Canadians say that they consider themselves to be ‘financially literate and have a good understanding of money, budgeting, savings, debt and investments’ – but only a quarter (25%) strongly agrees, while half (50%) somewhat agree. One quarter (25%) ‘disagrees’ (7% strongly/18% somewhat) that they financially literate, admitting that they are not. Those most likely to say they are not literate include Quebecers (35%), those who earn less than $40,000 a year in household income (30%), those under the age of 35 (30%), and those without a high school diploma (47%) or only a high school diploma (31%).

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