Is retirement security the next ticking political time bomb?
44% of non-retired Canadians aged 55-64 have less than $5,000 in savings according to a new poll conducted by Abacus Data for HOOPP
Yesterday, our client the Healthcare of Ontario Pension Plan (HOOPP) released the findings of its 2023 Canadian Retirement Survey that has been conducted by my company for the past five years.
Amid escalating inflation rates, a volatile economic environment, and an affordable housing crisis, Canadians across all age groups face a downturn in financial well-being, compromising their readiness for retirement.
Despite the financial stress, a significant portion of Canadians are willing to exchange part of their income for a pension. With the adverse economic conditions, fewer Canadians managed to save for their retirement in the past year. Inflation emerged as a major concern, impacting the cost of daily living and income stability.
Younger Canadians, those aged between 18-34, have been hit particularly hard by the ongoing economic conditions. The survey found that half of the respondents within this age group are living beyond their means, and are struggling with the costs of daily life, income inflation, and housing affordability. Furthermore, they have significant concerns about the impact of higher interest rates on their ability to save and reduce debt. There is also a significant disparity in home ownership, with only 43% of under 35s owning homes compared to 64% of older Canadians. Despite these challenges, younger Canadians demonstrated greater optimism about their financial future than older age groups.
The survey found that Canadians approaching retirement are also experiencing financial difficulty, with almost half reporting less than $5,000 in savings. If inflation continues to rise, 54% of respondents aged 55-64 believe they will need to delay their retirement. The cost of living remains the top concern for this age group, and the majority are anxious about having adequate funds for retirement. The data suggests that many are banking on the sale of their homes to secure their retirement, adding to their financial vulnerability.
What’s clear from this survey is that Canadians continue to value pensions highly and are willing to trade a portion of their salary for the security they offer. The value placed on pensions rises with age, with 88% of those aged 65+ favouring a better pension over a higher salary. Canadians with pensions report a better standard of living compared to those without.
The overwhelming majority of Canadians (86%) agree that it is in everyone's interest for more people to have better retirement savings, and 78% believe all employers should be required to contribute towards pensions for all workers.
HOOPP’s 2023 Canadian Retirement Survey reveals that Canadians across all age groups are struggling financially due to rising inflation and interest-rate hikes. Younger Canadians and those nearing retirement are finding it particularly challenging to manage their financial situations. Nevertheless, Canadians recognize the importance of good workplace pension plans and are willing to sacrifice pay for them. The results underscore the need for expanded access to these pension plans, with an expectation for employers and governments to play their part.
The Upshot
These results are striking in my opinion and show there’s a real political opportunity to talk about retirement and pensions, especially in the context of the affordability crisis occurring in Canada at the moment.
We are speedwalking to a retirement security disaster. Canadians have known this for some time (69% agree there is an emerging retirement income crisis in Canada) but almost no political leader is talking about it.
My advice:
Start talking about the issue. It’s important to all age groups, but especially those 5 to 10 years out from retirement. Given where the NDP is among this age cohort, this feels like a perfect issue for it to talk about.
Offer up some ideas that will incentivize workplace pensions and improve public pensions.
Repeat it over and over.
You can access the full poll results here: https://hoopp.com/home/pension-advocacy/research/canadian-retirement-survey-2023