Fidelity Investments Canada ULC today announced the launch of its new retirement index that measures how financially prepared working Canadian households are for retirement. This research shows that Canadian households are on track to replace only 50% of their pre-retirement income in retirement.

“The Fidelity retirement index is the new definitive standard Canadians can use to measure how prepared we are for retirement,” says Peter Drake, vp, economic and retirement research, Fidelity Investments. “It provides a clear answer to the number one question Canadians have about retirement: ‘Will I have enough?’ ”

The index analyses the broad financial picture of Canadian households including workplace and individual savings, projected asset growth, future savings, projected government sources of income and pension benefits, expected retirement horizon and longevity.

“By introducing the Fidelity retirement index, we hope to spark Canadians into action to start planning and saving for their future,” adds Drake. “A 50% retirement income replacement rate shows that most Canadians aren’t financially prepared for the full life they are looking for in retirement,” he says.

Insufficient savings could mean some retirees will have to scale back their retirement expectations.

Along with showing how Canadians are doing on a national scale, the index also measures the retirement preparations of working households across Canada. The results revealed some interesting variations: Quebec’s index score was highest at 53% and Alberta’s was the lowest in the country at 45%. The other regions include Atlantic Canada (52%), Ontario (50%), Manitoba and Saskatchewan (52%) and British Columbia (47%).

The overall 50% index score for Canadians shows they are lagging behind individuals in other countries in their preparation for retirement. Similar studies conducted by Fidelity show that individuals in the United States (58%) and Germany (56%) are better prepared than Canadians. Index scores for the United Kingdom and Japan were 50% and 47% respectively.

In Canada, Fidelity retirement index is based on a survey of more than 2,200 Canadians working full-time; 25 years or older; reporting household income of $20,000 a year or more; married/partnered with individuals who are also not yet retired; and are the financial decision makers in their household. The survey was conducted for Fidelity by Richard Day Research, Inc. in February 2007.

For full methodology and survey data see www.fidelity.ca.