Pattie Lovett-Reid: Why many Canadians are indifferent about RRSPs
Year after year, the financial industry gets hyped up encouraging Canadians to save for retirement. The deadline for the 2016 taxation year is March 1, and the maximum amount is the lesser of 18 per cent of your 2015 earned income, or $25,370. So time is running out. Hurry, get that contribution into your plan.
The industry might feel a sense of urgency but Canadians don’t, according to a new survey.
McKenzie Investments found that Canadians have become indifferent even a little complacent around saving for retirement. Seventy per cent of those surveyed are neither worried nor confident about their contributions at this time. Why? The indifference may have something to do with the climbing debt levels of Canadians coupled with job market is instability. The end result only 25 per cent of those they interviewed feel confident heading into the RRSP season.
These sorts of statistics worry me.
Every month, we see the Statistics Canada reports indicating the long-term employment trend among older people is up turning the traditional thoughts around retirement on its head. In a separate survey conducted by Credential Financial, they found there still remains a gap between reality and expectation when it comes to retirement.
Their report highlights, 48 per cent of Canadians in the workforce expect to retire at age 65 or older yet 62 per cent of retirees found themselves retiring earlier than they expected. Add to this, 42 per cent of working Canadians claim to have a plan around retirement, but three to 10 have not saved a single cent.
Put the two reports together – some are indifferent and unrealistic about retirement expectations. But that can change. Both surveys also highlight, working with an advisor increases your odds of having enough money set aside to sustain yourself in retirement leaving you less likely to work out of necessity.