“The decline in defined benefit and defined contribution retirement plans in recent years has fundamentally shifted the burden of retirement planning onto individuals,” said Christine Van Cauwenberghe, head of monetary planning at IG Wealth Management, in a press release.
As pensions disappear, many Canadians are left with no retirement plan
Employers began phasing out defined profit pension plans about 30 years ago, the discharge said, leaving more Canadians without the identical guaranteed income as previous generations.
“Our data shows that while Canadians recognize this shift, many still lack a clear picture of what they need to save – and how to turn their savings into a ‘personal retirement plan,'” said Van Cauwenberghe.
The survey found that only 11% of non-retired Canadians say they understand how much annual income they may need in retirement, while about half say they simply do not know in any respect. Only a 3rd said they’d retirement provision and savings.
Meanwhile, the survey found that a couple of quarter of employer pension recipients didn’t know the small print of their plan, including whether it was an outlined profit plan or an outlined contribution plan.
Canadians remain unprepared for longevity and market risk
The survey also highlighted knowledge gaps amongst Canadians whilst they increasingly depend on their personal savings. Only 4 in ten respondents said they knew anything about retirement planning, a registered retirement fund or the tax implications of retirement income.
Other findings included that few Canadians have considered longevity risks of their retirement planning, including inflation, health care costs and market downturns. Approximately 67% of respondents haven’t tested their plan for potential major economic or financial risks.
The online survey of 1,350 Canadian adults was conducted between Jan. 9 and Jan. 14 by Pollara Strategic Insights on behalf of IG Wealth Management. The polling industry’s trade association, the Canadian Research Insights Council, said online surveys can’t be assigned a margin of error because they don’t sample the population randomly.
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Tax-free savings exceed RRSP contributions
Data shows that in recent times Canadians have preferred financial instruments geared toward tax-free savings moderately than retirement.
In April last yr, Statistics Canada released figures on Canadians’ use of tax-deferred savings accounts in 2023, based on income tax return data.
The agency found that 11.3 million taxpayers contributed to either a registered retirement plan or a tax-free savings account. Of this group, 3.8 million contributed only to their RRSP, while five million contributed only to their TFSA. About 2.5 million have contributed to each their TFSA and RRSP.
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