- 54 per cent of Canadians remain confident in their retirement plans
- A third of Canadians plan to retire between the ages of 60 to 69 years, with an average age of 62
- The pandemic may have Canadians rethinking how much they will need to save for retirement
TORONTO, Jan. 20, 2021 /CNW/ - BMO's annual retirement study has found that confidence in retirement plans has remained relatively steady despite the financial challenges of 2020. The survey explored the degree to which Canadians are confident they will have enough money to retire at their desired age, with findings indicating a four per cent decrease in confidence nationally compared to 2019.
Provincially, Canadians in Ontario and the Prairie provinces were the most confident in their existing retirement plans at 58 and 57 per cent, respectively. Confidence levels were lowest among residents in the country's Atlantic provinces.
Making an RRSP
Amid the pandemic, over two thirds (64 per cent) of Canadians have or still plan to contribute to their Registered Retirement Savings Plans (RRSPs) – a number consistent with last year's findings. Respondents from Ontario and B.C. had the highest contribution rates, with Quebec and the Atlantic provinces having the lowest rates.
"The past year was challenging for Canadians in many ways, including financially," said Robert Armstrong, Director, Multi-Asset Solutions, BMO Global Asset Management. "It's encouraging to see such resilience among Canadian investors, and the continued prioritization of retirement planning. Heading into 2021, it's important to continue planning for the unexpected and we encourage investors to seek professional guidance in developing a long-term plan to help ensure a secure financial future."
Canadian retirement snapshot
The study also uncovered additional key insights into Canadians' retirement planning and savings habits including:
- The average amount Canadians think they need to retire has increased six per cent since 2019 to $1.4 million. However, over half (53 per cent) of respondents do not have a dollar amount estimate for what they need to retire.
- A third of Canadians plan to retire between the ages of 60 to 69 years, with an average age of 62.
- There has been a decrease in withdrawals among RRSP holders before the age of 71, with 28 per cent doing so in 2020 versus 37 per cent in 2019. The primary reason for early withdrawal continues to be to buy a home, with only six per cent doing so for pandemic-related expenses.
- Among the 70 per cent of Canadians relying on a financial advisor, over two thirds (62 per cent) say a professional is better equipped to provide guidance to help achieve their goals – a 12 per cent increase since 2019.
For Canadians rethinking how much they will need to save for retirement and when they will be able to retire, BMO offers the following retirement planning tips:
- Start planning early: Outlining retirement objectives and long-term financial goals can determine the appropriate investing and savings solutions to incorporate in a retirement plan.
- Practice discipline: Manage spending, review budgets and include continuous savings plans as an expense. Monitoring spending with a monthly budget will allow flexibility to suspend or decrease the continuous savings plan when needed, or increase the amount when a budget allows for it.
- Stress testing strategies: In an environment of low interest rates, there is an opportunity to stress test all strategies in the event of a rate increase before the termination of any borrowings undertaken.
- Plan for the unexpected: A good financial plan incorporates options than can plan for the unexpected. These options can anticipate various financial situations and offer solutions to ensure the financial plan can still achieve its goals.
- Seek professional advice: A professional advisor has the resources and expertise to monitor the retirement portfolio regularly and recommend investing and savings strategies based on financial circumstances, aversion to risk and long-term financial goals.
For more information on BMO's investment plans, please visit www.bmo.com/myplan.
For more information on BMO Registered Retirement Savings Plan Accounts and opening an account, please visit www.bmo.com/rrsp.
The BMO RRSP Survey was conducted by Pollara Strategic Insights via an online survey of 1,500 adult Canadians conducted between November 17th and 23rd 2020. The margin of error for a probability sample of this size is ± 2.5%, 19 times out of 20.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $949 billion as of October 31, 2020, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group