Nearly half of Canadians don't know what rate of return they require on their investments to achieve their retirement goals, according to a new CIBC poll conducted by Harris/Decima.
This uncertainty is causing many Canadians to delay investment decisions that put their retirement plans in jeopardy, says Steve Geist, president of CIBC Asset Management.
"The fact that almost half of Canadians don't know what return they need to meet their retirement goals underscores why so many people feel angst about their retirement plans," adds Geist. "When you don't know what rate of return you need, it is very difficult to make an informed decision on what to invest in. This is where the input of an expert financial advisor can be invaluable."
According to the poll, 45% of all Canadians say they do not know the annual rate of return they need from their investments to meet their retirement goals.
Meanwhile, only 28% expect their 2012 rate of return to be less than in past years.
Despite their ignorance over rate of return, 57% said they are most interested in choosing low risk, guaranteed or no-risk (i.e. cash) investment options, products that generate little in the way of return — and in many cases less than the rate of inflation.
Geist is concerned that this investment approach is actually putting Canadians further out of touch with their retirement goals.
"Many Canadians don't realize the importance of the returns they achieve," Geist says. "For many people, adding a percentage point or two to returns can have more impact on the nest egg than their annual contribution."
The CIBC poll was conducted by Harris/Decima, which surveyed 1,005 Canadians. The associated margin of error is +/- 3.1%, 19 times out of 20. Polling was conducted between Dec. 8 to 12, 2011.