Canadians think they’ll need a depressing $1.7 million to retire: report

Do you think you can save enough money to retire as planned? Most Canadians don’t.

According to a new Bank of Montreal (BMO) survey, Canadians believe they need to save at least $1.7 million to retire, and many are unsure they will make it.

That depressing number is up drastically from people’s expectations of $1.4 million two years ago. It’s also the largest number since BMO began this annual survey 13 years ago.

Those expectations come after inflation hit a record high of 8.1% last summer. It has since fallen to 6.3% in December and is expected to decline to around 3% by the end of the year, according to BMO.

With Canadians in the midst of rising living costs, BMO found that 74% are concerned about how current economic conditions will affect their financial health, and 59% believe it will affect their confidence in achieving their retirement goals .

However, the survey also found that Canadians are prioritizing retirement savings as “both contributions and account balances are up year over year.”

“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 Private Investments at BMO.

This is reflected in the average amount held in RRSPs nationwide – $144,613, up 2% from 2021 ($141,923).

BMO adds that 43% of Canadians have already contributed to their RRSPs for tax year 2022, and another 14% plan to contribute before the March 1, 2023 deadline.

While 22% of Canadians plan to retire between the ages of 60 and 69, Millennials and Gen Z are most concerned about their ability to save and invest right now, according to the survey.

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

Source: dailyhive.com