Most Canadians are concerned about the high cost of retirement, and many are worried about outliving their savings, new research finds.
Nine in 10 Canadians, who are not retired, are concerned about the possible high cost of retirement, according to survey results published Wednesday by Toronto-based Franklin Templeton Investments Corp.
Lifestyle and health care expenses were cited as the top retirement spending concerns, the firm says in a news release.
“Although Canadians benefit from coverage for doctor and hospital visits, health care expenses are still a top concern because seniors face the prospect of rising costs for long-term care and prescription drugs as lifespans continue to increase,” says Duane Green, president and CEO of Franklin Templeton in Canada, in a statement.
The survey also finds that 49% of Canadians, who are not retired, are concerned about either outliving their retirement savings, or having to “make major sacrifices” to cut spending in retirement. This is also a concern for millennials, with 43% saying they have these worries.
“Perhaps even more troubling, is that 15% of Canadian pre-retiree baby boomers and a quarter of pre-retiree generation X have not saved anything for retirement,” the firm says.
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Many Canadians are expecting to continue working to make up for the lack of savings. The survey finds that 65% of Canadians who are not retired are considering working during retirement, and 19% of baby boomers say that they expect employment income to be their primary source of income in retirement.
Additionally, 26% of baby boomers expect to rely on inheritance to help fund retirement, compared with 40% of millennials.
The survey also finds that many Canadians are stressed and anxious about having enough for retirement.
More than two-thirds (67%) of Canadians experience stress and anxiety when thinking about their retirement savings, which is down five percentage points from 2016 when 72% of those surveyed were stressed and anxious.
“The modest decline in stress and anxiety levels is good news, but it may be a case of recency bias, which is when investors focus largely on recent results. Canadians might have been looking back at the S&P/TSX composite index over the past year and seeing a return of 18% in 2016. In contrast, when they looked back on 2015, the same Canadian equity benchmark had fallen 11%,” says Matthew Williams, SVP, Franklin Templeton.
“This is why it is important to work with a financial advisor to build a solid, realistic retirement savings plan and stick to it, while avoiding the distraction of short-term volatility,” Williams adds.
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The results are based on an online survey of 2,000 Canadians, aged 18 and older, which was carried out from Jan. 6 to 18 by ORC International.
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