Three quarters of Canadians (76%) are worried they will not have enough money in retirement because of rising inflation. This is according to BMO’s 15th annual retirement survey, which also found 63% of Canadians believe rising prices over the past 12 months have limited their ability to save for retirement.
"Many Canadians continue to show resilience, making saving and investing in their retirement a top priority," Brent Joyce, BMO Private Investment Counsel’s chief investment strategist and managing director, said in a statement.
"For Canadian investors, one of the best ways to make financial progress and stop rising prices from eroding retirement savings over the long term is to have a portfolio designed to mitigate inflationary pressures, while also taking other factors like investment time horizon and risk tolerance into account. Investors may also want to consider speaking with an investment advisor when looking for ways to help reduce the impact of inflation on their portfolio."
On average, Canadians surveyed believe they will need just over $1.54 million to retire, down from $1.67 million in 2023.
Inflation’s impact on financial planning
Among the 63% of Canadians who say rising prices are limiting their ability to save for retirement, the top four ways they are adjusting their financial planning are:
- Cutting other spending to maintain current retirement savings levels
- Putting less into retirement savings
- Planning on working longer
- Putting off retirement savings completely
"Inflation is a major concern for Canadians, and the spike in prices as the economy emerged from the pandemic is a stark reminder rising prices can affect spending, investment and savings plans," Robert Kavcic, BMO senior economist, said in a statement.
"Inflation should always be a major consideration when saving and investing for retirement and if investors have concerns about how rising prices may impact their retirement savings, it may help to seek guidance from a financial professional."
Retirement woes
Canadians are contributing more than ever to their Registered Retirement Savings Plans (RRSP). This year, average RRSP contributions are on track to reach $7,447 — which marks a 14% increase over last year from $6,512 and above the pandemic high-water mark set in 2021 of $6,822.
For those hoping to save for retirement amid inflationary concerns, BMO recommends planning early, practicing discipline, contributing securities to an RRSP and seeking professional financial advice.
Survey methodology
The survey of 1,500 adult Canadians aged 18 and older was conducted online by Pollara from November 8 to 18, 2024.
This article Over three quarters of Canadians concerned about retirement thanks to inflationoriginally appeared on Money.ca
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