Canadians are finding a way to live well today without shortchanging their future, according to RBC Financial Group’s 16th Annual RRSP Survey.
Results from the poll show that owning a home and saving for retirement are the top two financial priorities for Canadians — 61% of respondents say their most important financial goal is home ownership; 56% say it’s retirement savings.
“Canadians want to make the most of life in the moment, and they aren’t necessarily willing to put their plans for the future on hold,” said Dave Richardson, vp of RBC Asset Management Inc. “They’re looking for ways to maximize their savings and investments to meet immediate financial commitments like mortgages, car payments, and putting their children through college or university. The challenge is to do the right planning, to find the balance between being able to live well today, and still being financially comfortable tomorrow.”
As part of their plan, more Canadians are looking to home equity as a way to help support themselves in future. According to RBC’s poll, one in three (34%) Canadians who are not yet retired are expecting that their home will be a source of retirement income. Of those considering their homes to be a primary or secondary source of income in retirement, 40% anticipate that the sale of their home, or the use of their home’s equity, will account for up to half of their retirement income.
“While some Canadians may consider their home to be a significant source of retirement income, home equity is better viewed as one of a diversified mix of investments designed to provide retirement income,” said Richardson.
Interestingly, two out of every three (65%) Canadians are planning for their retirement years, and while this is most likely among those aged 55 plus (73%), two thirds (67%) of those aged 35-54 and almost half (48%) of those in the relatively young age category of 18 to 34 years are planning for their retirement.
“This is the first time in the 16 years we’ve been conducting this poll that this younger age group has figured so strongly in these retirement planning statistics,” said Richardson.
Younger Canadians are increasingly accumulating retirement savings to support their future plans. Sixty-two per cent of those aged 18 to 34 now hold RRSPs – up from 44% five years ago.
In all age groups, a record number of Canadians now have RRSPs – 68%, up from 57% just five years ago.
More Canadians are also factoring in retirement savings as part of their budget, with 34% contributing through a monthly or quarterly plan – up from 29% in 2003.