“Prepare To Retire In Canada: How To Save The Necessary $1.7 Million For Financial Security”
CALGARY –
Canadians now believe they need $1.7 million in savings to retire, a 20 percent increase from 2020, according to a new BMO survey.
The staggering figure is the largest total since BMO began surveying Canadians about their retirement expectations 13 years ago. It’s also a dramatic increase from the $1.4 million in savings Canadians would need for their nest egg two years ago.
The results reflect concerns among Canadians about current economic conditions, particularly inflation and higher prices, said Caroline Dabu, head of wealth allocation and advisory services at BMO Financial Group.
“If you look at the average Canadian, they’re feeling the rising cost of inflation,” Dabu said.
“And so it’s not surprising that Canadians feel like they’re going to desperately need more to retire.”
Canada’s annual inflation rate hit a four-decade high of 8.1 percent in the summer of 2022 and has since fallen to 6.3 percent through December 2022. BMO Economics expects the country’s CPI to fall to around three percent by the end of the year.
The sharp rise in Canada’s inflation rate in 2022 outpaced wage increases, eroding the spending power of most families and fueling fears about the future. The BMO survey found just 44 percent of Canadians are confident they will have enough money to retire as planned — a 10 percent drop from 2020.
But while the $1.7 million figure might sound overwhelming for working-age Canadians, Dabu says the number says more about the country’s economic sentiment than actual retirement needs.
“When we work with clients, we certainly find that many overestimate the number they need to retire,” she said.
“It really has to be looked at on an individual level because circumstances vary a lot … But $1.7 million, I would say, is high.”
While rising inflation may require adjustments to a retirement plan — like adding a little more to savings each month if you’re a young worker, or making cash flow adjustments as you near the end of your working career — Dabu said those changes don’t have to necessarily be drastic.
When it comes to retirement planning, says Dabu, knowledge is power. By working with a professional financial advisor and creating a plan that incorporates individual circumstances and goals, Canadians can create their own retirement savings number.
“In the survey, we find that 53 percent of Canadians didn’t know how much they’re going to need for retirement,” Dabu said.
“This increased confidence comes from knowing the exact number I need to save for and how to get there.”
The BMO survey also found that about 22 percent of Canadians plan to retire between the ages of 60 and 69, with a median age of 62.
Millennials and Gen Z Canadians are the most nervous about their ability to save and invest, according to the survey. However, all age groups — 74 percent of survey respondents — said they were concerned about how current economic conditions will affect their financial health, and 59 percent said economic conditions were affecting their confidence in achieving their retirement goals have.
The BMO survey was conducted between November 4th and 7th, 2022 by Pollara Strategic Insights via an online poll of 1,500 people. The survey error rate is plus or minus 2.5 percent, 19 out of 20.
—-
This report from The Canadian Press was first published on February 7, 2023.
Source: www.ctvnews.ca
Don’t miss interesting posts on Famousbio
