Canadians don't feel financial crisis hurt ability to save for retirement: HSBC

Canadian investors feel less bruised by the last global economic downturn than people in other parts of the world, but are also less confident they can save enough for a comfortable retirement in future, a new survey suggests.

The HSBC report says only 18 per cent of Canadian respondents feel the 2008-09 financial crisis impacted their ability sock away money for retirement, well below the global average of 26 per cent.

However, four in 10 Canadians are worried about having enough money to retire on, versus the global average of 35 per cent.

The report cites the rising cost of living and growing debt as reasons why Canadians can’t save more.

“Canadians may not be feeling the tailwinds of the economic downturn on their retirement savings simply because the chill of too much debt and a high cost of living is taking precedence,” said Betty Miao, head of retail banking and wealth management at HSBC Bank Canada, in releasing the survey on Monday.

About half of Canadian respondents say their mortgage or other debts are preventing them from putting money into an RRSP (Registered Retirement Savings Plan) or other investment vehicles.

About a third say they are less able to save money today than they were just one year ago. That’s above the global average of 27 per cent.

The survey is the latest in what’s expected to be a flood of retirement studies to be released in the coming weeks as financial institutions ramp up their messaging ahead of the March 2^nd RRSP deadline.

It’s the time of year when banks try to drive home the importance of saving money for retirement. Starting early is among the key points made.

“Retirement can seem a long way off when you are young, however two in five (40 per cent) retirees say that starting to save earlier would have improved their standard of living in retirement,” states the HSBC report.

Canadian aren’t saving

“It is crucial to start making retirement plans as early as you can.”

The survey results are a bit worrisome. They show only 24 per cent of Canadians were able to save for retirement over the past year, which is below the global average of 40 per cent.

It also says 37 per cent of working Canadians surveyed aren’t saving for retirement, nor do they plan to.

“Even more concerning, the same proportion (37 per cent) of those nearing retirement (aged 45 and over) are not saving or do not intend to save for retirement,” the report states.

It says 15 per cent of working Canadian surveyed don’t think they will ever be able to fully retire. About two-thirds say they cannot afford it and 30 per cent believe they will not be able to maintain a comfortable lifestyle when they retire.

It also says many retirees have an annual household income well below what they consider necessary for a comfortable retirement, which is a minimum of $57,500 a year. The report says 48 per cent of retirees reported living on a household income of less than $50,000 a year.

Canadian investors gun shy?

Markets have been volatile in recent months, especially in Canada amid the steep drop in oil prices, which has some investors skeptical about pouring their money into equities.

Marc Cevey, CEO, HSBC Global Asset Management (Canada) Ltd. believes investors so far have been resilient, due in part to the strong returns they’ve seen over the past year or two across North American markets.

“Volatility doesn’t necessarily translate into losses,” says Cevey.

He also said most retail investors have a diversified portfolio, which means they’re losing in some sector but gaining in others.

“In today’s scenario, the weakness in Canadian equities has been partially offset by the strength in bonds and investments in U.S. equities,” he says.

Like most money experts, he recommends investors focus on the long-term and understand just how well they can stomach risk.

“The investor most likely to make mistakes in an environment of volatility is the one who has not matched his or her personal risk tolerance with their portfolio risk profile,” he says.

“Another common mistake made is to shift risk appetite dependent on the market conditions. This supposes investors can time a shift in their investment strategy to either mitigate short-term negative events or take advantage of opportunities.”

But as we all know, it’s nearly impossible to time the market.