Half of Canadians concerned about retirement savings

More than one half of working Canadians are concerned they haven’t saved enough for retirement, while one fifth say they are relying on the Canada Pension Plan, an inheritance or a lottery win to finance old-age needs, a new survey found.

About 91% of Canadians say they are concerned about retirement, the survey by TD Bank Financial Group said. Despite the concerns and last year’s recession, about three-quarters of Canadians don’t plan to push back the age at which they plan to retire, a separate Scotiabank study found.

As the deadline for RRSP contributions looms, banks and financial advisors are making a push to encourage Canadians to think about and save more for their pensions. Recent studies have shown contributions to RRSPs are declining on a mix of changing demographics and on economic uncertainties and that’s raising concern about how people will finance their retirement.

“Saving for retirement can be daunting, especially when day-to-day expenses and more immediate savings goals eat into the majority of your income,” said Carrie Russell, senior vice president core banking and payments at TD. “Having a retirement savings plan provides not only a cushion for the future but also provides tremendous value in the short run,” she said, pointing to tax benefits.

Scotiabank found that the average Canadian plans to retire at age 61, with half planning to retire before 65, up from 43% in 2008.

About 73% of Canadians in the Scotiabank survey said the recession hadn’t affected retirement plans. The number of Canadians who don’t fully plan to retire has dropped by half to 5% in 2009 from 10% in 2008, it found.

“To achieve their retirement goals, Canadian investors need to ensure they have a balanced portfolio,” said Beverley Moir, ScotiaMcLeod senior wealth manager. “Many investors are sitting on the sidelines in cash, bonds or GICs, however the current historic low interest rates will not provide the growth needed for many to reach their set retirement goals.”

BMO Financial Group in a report also released today, said Canadians are confused about what those goals should be. Some see the magic figure of being at least $550,000, while others believe they need to save at least $1 million, it said.