Canadians are facing challenges when it comes to saving for retirement, as inflation and higher interest rates are causing many to delay their retirement plans, according to a recent survey conducted by the Healthcare of Ontario Pension Plan (HOOPP). The survey reveals that Canadians of all ages are finding it increasingly difficult to save for retirement, particularly those in the older age group who should be looking forward to retirement. Ivana Zanardo, head of plan services at HOOPP, states that rising inflation and interest rates are making it harder for older Canadians to adequately prepare for retirement.
Although inflation has been slowly cooling in recent months, it still remains at a high rate of 4.4% in April year over year, which is more than double the central bank’s target rate of two percent. In response to these inflationary pressures, the Bank of Canada recently raised its overnight rate to 4.75 percent after several months of holding it steady, citing concerns about sticky inflation.
The survey conducted by HOOPP and Abacus Data found that 44% of non-retired Canadians aged 55 to 64 have less than $5,000 in savings, with one in five from that group admitting that they have not set anything aside for retirement. Zanardo describes the situation as bleak for older Canadians, stating that more than half of those surveyed in the 55 to 64 age group said they would have to delay their retirement if inflation continues to rise.
Zanardo emphasizes the need for older Canadians to be better prepared for retirement, especially as they approach the age when they should be looking forward to it. However, the current economic conditions, including inflation and rising interest rates, are prompting them to reconsider their retirement plans.
According to Abacus Data CEO David Coletto, this year’s survey findings reveal that around 70% of respondents have consistently agreed that Canada is heading for a retirement crisis. Coletto suggests that if current economic trends continue, the retirement crisis for older Canadians may be imminent.
The survey also highlights the financial concerns of young adults aged 18 to 34, who are struggling to plan for the future. Half of them admit to living beyond their means, and many express worries about the impact of higher interest rates on their retirement savings and ability to pay off debt.
Zanardo emphasizes the importance of saving early and saving often to prepare for retirement, but acknowledges that it can be challenging with the rising cost of living. She notes that this group is particularly concerned about their income keeping up with inflation, housing affordability, and their ability to save for retirement.
Despite the financial challenges, the survey reveals that nearly 70% of respondents would be willing to take lower pay in exchange for a better pension. Furthermore, 78% of participants believe that all employers should be required to contribute to pensions for their workers.
In conclusion, the survey conducted by HOOPP and Abacus Data highlights the difficulties Canadians face in saving for retirement. The rising inflation and interest rates are causing both older and younger Canadians to reassess their retirement plans and worry about their financial security. However, there is a general consensus among respondents that measures need to be taken to address these concerns and ensure a more secure retirement for all Canadians.
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