Canadians are more optimistic than Americans about their ability to save for retirement, but many people in both countries expect that they’ll have to delay retirement due to insufficient savings, according to a recent cross-border study commissioned by BMO Financial Group.
The survey, conducted by Leger Marketing in November, polled more than 2,500 Canadians and Americans. It found that almost 60% of Canadians are confident in their ability to save for their ideal retirement lifestyle; while fewer than 40% of Americans feel the same way.
“An alarming number of U.S. citizens are concerned that they will not be able to save enough to maintain their current lifestyle retirement,” said Todd Perala, director of relationship management at BMO Institutional Trust Services in Milwaukee, in a conference call on Thursday.
But it’s not all good news north of the border either, noted Tina Di Vito, head of the BMO Retirement Institute, and author of 52 Ways to Wreck Your Retirement… and How to Rescue It. Canadians have become less optimistic in the past year, she pointed out, with 36% indicating that they’re not confident about their ability to save enough for retirement, up from 18% last year.
“We are still looking positive to some extent, however the numbers are declining,” said Di Vito in Thursday’s conference call. “Several years of volatile markets, worldwide economic unrest and low savings rates in Canada has people wondering if they’ll ever be able to save enough for retirement, when savings are not really growing as fast as they need them to.”
Canadians are more likely than Americans to have a retirement savings plan in place, BMO found. Almost two-thirds of Canadians have a Registered Retirement Savings Plan, according to the survey, while only 34% of U.S. residents said they have a 401K – a U.S. retirement savings plan similar to an RRSP.
However, residents of both countries are clearly feeling the impact of the recent market volatility in their retirement savings plans. More than two-thirds (71%) of Canadians said they’re concerned about the performance of their RRSP, and an even higher proportion of U.S. residents (90%) expressed similar concerns about the performance of their 401K.
Amid concerns that they might not have enough savings for retirement, half of Canadians and Americans surveyed said they expect that they may have to delay their retirement and/or work part-time during retirement.
“Very few Canadians can say that they’ve actually made much progress in the retirement savings area over the last five years,” said Di Vito, “and it’s expected that working longer seems to be the solution.”
For many, she added, working longer will be a requirement – not a choice.
As workplace pensions continue to become less common, it’s going to become increasingly important for both Canadians and Americans to take retirement planning into their own hands, Perala said.
“Today, the responsibility clearly has shifted to the individual,” said Perala. “The individual has to step up and accept the responsibility and understand that it’s up to them. Their ability to have the retirement that they want is really within their control.”