Canadians now expect to need $1.7 million to retire, up 20% from 2020, a BMO survey found

“Canadians Face Unexpected Retirement Savings Challenge as Cost of Retirement Jumps 20%”

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Canadians believe they will need to save up to $1.7 million to retire, up 20 percent from 2020, according to research released Tuesday by BMO Financial Group.

“While the expected headwinds in 2023 will understandably raise concerns about how inflation and interest rates will affect our finances, Canadians remain resilient and are taking proactive steps to protect and invest in their retirement nest egg,” said Nicole Ow, Head of Retail Investments at BMO.

According to the report, Canadians are prioritizing retirement savings as both contributions and account balances are up year-over-year. The national median amount held in the Registered Retirement Savings Plan (RRSP) increased two percent in 2022 to $144,613, while nearly half of Canadians said they contributed to their RRSPs for the tax year.

Although they believe they need to save more money, only 44 percent of Canadians are confident they will have enough to retire as planned, the study found. That figure represents a 10 percent decrease from 2020.

When it comes to saving for retirement, the survey shows that Canadians have mixed approaches, with 22 percent planning to retire between the ages of 60 and 69, with an average age of 62.

Of those who had experienced a major life event, such as starting a family, moving house or starting a business, since the start of the pandemic, 20 percent experienced a loss of income and nine percent had to earn a large payment.

The study added that 69 percent of Canadians believe the state of the economy has affected the amount they save, and 60 percent say it has affected the money they invest.

Canadians can turn to financial advisors to help them focus on their financial goals during disruptions, major life events and uncertainties, Ow said.

The BMO survey, conducted by Pollara Strategic Insights, surveyed 1,500 adult Canadians online between November 4th and 7th, 2022. The margin of error for a probability sample of this size is ±2.5 percent, 19 out of 20.

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Source: financialpost.com

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