Canadians in the dark on pensions, retirement savings: survey

So, you’re socking away money for retirement and looking forward to spending long days on the golf course and travelling with your other grey-haired friends. How much money will you need to enjoy that lifestyle?

It turns out many Canadians don’t know the answer, or have unrealistic expectations about what they need to support them through their retirement years.

A new Investors Group survey says Canadians aged 55-to-64 are confident they have enough money to live “the retirement lifestyle,” but don’t actually know how much they’ll be getting from their company and/or government pensions to make it happen.

The results show 60 per cent of Canadians plan to rely on an employer pension as a source of retirement income, and 37 per cent say it will be their primary source. Of those, 55 per cent didn’t actually know what monthly benefit would be. Seven-in-10 believe they will have enough to cover their cost of living in retirement, but when asked how much that is, 42 per cent couldn’t say.

“The research revealed that as Canadians approach the age of retirement, a significant number are still not aware of what it will take to support their lifestyle,” says the report.

The results also show 69 per cent of people nearing retirement age were unaware of what the maximum monthly payout from government is for Canadian Pension Plan or Quebec Pension Plan and Old Age Security.

“Yet more than 8-in-10 of this age group say they plan to use this as a source of retirement income, and more than one-third anticipate this will be their primary source,” the report states. “While Canadians appear optimistic about their retirement lifestyle, few have a firm handle on what their cost of living will be and what their pensions will offer.”

It’s the latest in a flurry of retirement polls being released by financial institutions at this time year, which is prime investment-selling season ahead of the March 3 Registered Retirement Savings Plan (RRSP) deadline.

While it’s easy to scoff at the survey results as marketing tactic to try to scare investors into buying more RRSPs or other investments, there is legitimate concern about people not saving enough. After all, there could be wide-sweeping consequences if a chunk of the population miscalculates how much money they need to retire, and in turn needs to rely on government services to support them as they age.

It’s an issue that’s particularly concerning as the Baby Boom generation, the dominant demographic by population and arguably spending power, continues to enter their retirement years.

"As you near the age of retirement, it is even more important to understand what your cost of living will be and to consider how that amount may fluctuate throughout your retirement years," stated Dave Ablett, director, tax and estate planning, at Investors Group.

Nearly three-quarters of Canadians still working say they expect to be able to maintain their current lifestyle in retirement.

That said, more than two-thirds (66 per cent) don’t think the government will be able to provide adequate pension and retirement benefits down the road.

"While the survey indicates that Canadians are approaching retirement with confidence, it also identifies the need for Canadians to gain a better understanding of what their ideal financial future looks like so they can build a plan to get there," says Ablett.

The survey was done in late January by Harris/Decima and included just over 1,000 responses.