More than 6 in 10 Canadians set nothing aside for retirement last year
Two-thirds (67 per cent) of Canadians feel that the country is facing an emerging retirement crisis, according to a new report.
Why? More than six in 10 (63 per cent) have not set aside anything for retirement in the past year, up by five per cent from data recorded in 2020.
Plus, 65 per cent said that saving for retirement is prohibitively expensive, according to the Healthcare of Ontario Pension Plan (HOOPP).
The top reason they are not saving more? They are living paycheque-to-paycheque, say 36 per cent of respondents.
And 48 per cent of Canadians are “very concerned” about not having enough money in retirement compared with their physical health (44 per cent), mental health (40 per cent), debt load (31 per cent) and job security (26 per cent).
“After more than a year of COVID-19, Canadians remain steadfast in their personal and societal concerns around retirement security,” says Steven McCormick, senior vice president for plan operations at HOOPP. “As day-to-day financial pressures mount for some and ease for others, Canadians across the board are acutely aware of the importance, and challenge, of saving for retirement."
Retirement savings disparity
In 2020, 46 per cent of Canadians saved more money during COVID than they otherwise would have. However, among these, 52 per cent set aside nothing for retirement.
Among those who saved less than usual, 72 per cent saved nothing for retirement, found the survey of 2,500 Canadians in April.
The pandemic also harmed the finances of 52 per cent of respondents. However, those aged 44 and younger are twice as likely to have had their finances greatly harmed (24 per cent) than Canadians aged 60 and up (11 per cent). Also, those earning less than $50,000 are twice as likely to have had their finances greatly harmed (25 per cent) than those earning more than $100 (12 per cent).
Forty per cent of Canadian adults worry about the effect of COVID-19 on their savings and retirement plans, according to a previous report.
Wanted: Help from employers
Workplace pensions can help address the problem, according to many Canadians. More than three-quarters (77 per cent) say employers have a responsibility to offer a pension plan and a strong majority say that all workers should have access to affordable (85 per cent) and efficient (84 per cent) retirement savings arrangements.
More than seven in 10 (71 per cent) are willing to forgo a higher salary for a better pension plan.
“The pandemic has exacerbated the divide between those who can save for retirement and those who can’t,” says David Coletto, Abacus Data CEO. “Those who are the least likely to save – younger and lower-income Canadians – were the hardest hit by the health crisis. This year’s results also show widespread agreement that employers can play an important role in making saving for retirement more affordable.”
Employers want to deliver greater value and a better employee outcome for retirement, but they struggle to engage employees, according to a report by Aon.
While planning for retirement might be perceived as the responsibility of the individual, it’s up to organizations to start the conversation and show an openness to looking at retirement in creative ways, according to Randstad Risesmart.
“If everyone who is of a certain age is put in the same bucket in terms of what they want or what they are looking for, companies lose out on opportunities to help these contributors create a unique path that meets their needs and the needs of the company.”