About a quarter of Canadians are relying primarily on company-paid pension plans, according to a recent survey, and the majority plan on investing less for their retirements this year than in 2002.
The TD Wealth Management RSP Investor poll found Canadians expect an average 8.9 per cent return on their retirement investments in 2003, the same they expected the year before. But the average contribution is expected to be about $3,900, 20 per cent lower than last year’s average of $4,850.
The survey found a large drop in the size of the nest egg Canadians think they’ll need to live on after retirement, down to $547,000 from $652,000 in 2002.
“It’s quite interesting that people have revised their retirement needs downward by more than 15 per cent,” said Moshe Milevsky, professor of finance at York University’s Schulich School of Business in Toronto. “If this result is statistically significant, then we are seeing a trend that so-called retirement goals are not as universal and absolute as we once thought. But what is slightly more alarming is that investors are reducing their contributions to equity-based mutual funds at a time when market experience and conventional wisdom would dictate they shouldn’t.”
Slightly more than half are counting on personal savings and RSPs to fund their retirement, while 33 per cent will rely primarily on their CPP/QPP pension and 26 per cent are relying on a company pension plan.
Of this 26 per cent, two-thirds had no idea what types of investments made up their pension plans.
“These numbers are troubling,” said Patricia Lovett-Reid, vice-president and managing director with TD Wealth Management. “With demographic trends indicating there will be fewer working Canadians supporting more retirees, it is debatable whether the CPP/QPP will be able to provide future pensioners with a reasonable standard of living. And for those who are counting mostly on their company pensions, it is important that they become familiar with the investment strategies of their plan sponsors and what investments make up their retirement portfolio.”
The TD Wealth Management RSP Investor poll found Canadians expect an average 8.9 per cent return on their retirement investments in 2003, the same they expected the year before. But the average contribution is expected to be about $3,900, 20 per cent lower than last year’s average of $4,850.
The survey found a large drop in the size of the nest egg Canadians think they’ll need to live on after retirement, down to $547,000 from $652,000 in 2002.
“It’s quite interesting that people have revised their retirement needs downward by more than 15 per cent,” said Moshe Milevsky, professor of finance at York University’s Schulich School of Business in Toronto. “If this result is statistically significant, then we are seeing a trend that so-called retirement goals are not as universal and absolute as we once thought. But what is slightly more alarming is that investors are reducing their contributions to equity-based mutual funds at a time when market experience and conventional wisdom would dictate they shouldn’t.”
Slightly more than half are counting on personal savings and RSPs to fund their retirement, while 33 per cent will rely primarily on their CPP/QPP pension and 26 per cent are relying on a company pension plan.
Of this 26 per cent, two-thirds had no idea what types of investments made up their pension plans.
“These numbers are troubling,” said Patricia Lovett-Reid, vice-president and managing director with TD Wealth Management. “With demographic trends indicating there will be fewer working Canadians supporting more retirees, it is debatable whether the CPP/QPP will be able to provide future pensioners with a reasonable standard of living. And for those who are counting mostly on their company pensions, it is important that they become familiar with the investment strategies of their plan sponsors and what investments make up their retirement portfolio.”
