Nearly one half of Canadians don’t feel that they’re financially prepared for retirement according to an Ipsos Reid survey commissioned by the Canadian Institute of Actuaries (CIA) released Monday, June 14th, 2010.
New survey finds that Canadians are worried about retirement - but they won't seek help
Only forty five percent of those surveyed agreed that they were confident in their financial future while thirty four percent disagreed. Furthermore, one in five (20%) said they would never fully retire and only one in ten (8%) respondents indicated that they were “very prepared” for retirement while forty two percent indicated that they were not prepared (13 per cent “not at all”, 29 per cent “not very”).
It is interesting to note that while almost half of pre-retired Canadians above the age of forty five are not fully prepared for a comfortable retirement, they are certainly aware of the risks associated with retirement. Some of the major risks include depleting one’s retirement savings, not being able to maintain a comfortable standard of living in retirement and concern about long term health care. CIA President Robert Howard points to the fact that “72 percent of pre-retired Canadians are concerned about maintaining a reasonable standard of living in retirement and what impact increasing health care costs will have on their savings and overall quality of life.” “They are very aware of the risks of retirement but there seems to be a reticence or perhaps a lack of knowledge about how to address those risks or how to manage them today,” said Chris Fievoli a resident actuary with the Canadian Institute of Actuaries (CIA). This indicates a significant gap between intent and action.
In a report entitled “Retirement Risk: Defining retirement horizons,” the CIA identified three stages of retirement. The first stage is when your standard of living is very similar to what you had before retirement; the second stage is when you are able to do somewhat less which is a natural result of aging and the third stage is when you end up being able to do much less and that’s the point at which you may want to look at a long term care facility and may not be able to care for yourself. Despite recognizing the various stages and financial requirements, just over half (53 percent) pre-retirees have focused the majority of their planning only on Stage I. Furthermore, just over half the respondents to the survey recognized that someday they may need to have a long term care facility but that means that almost half of the respondents didn’t think that was concern. One can interpret that a couple of ways, said Fievoli, “either they think that is not going to happen to them or they are just not aware that is a risk they have to deal with now, so that’s concerning.”
The survey found that roughly four in ten have consulted a financial advisor and another two in ten have consulted a bank looking for retirement advice. Commenting on this finding, Fievoli said “We feel that’s a little bit troubling. We believe that people should be talking to their advisors and others that have the knowledge to help them manage retirement. Long term care is one piece of that puzzle, savings for retirement is another. We would like to see more Canadians getting out having those conversations and being better prepared with some expert help.”
The CIA hopes the survey results will urge Canadians to develop an action plan in order to ensure a secure financial future
The survey polled more than two thousand Canadians aged forty five and older, split between pre-retirees (adults who are not retired) and retirees (adults who identify themselves as retired).
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