Canadians know that they should begin planning for retirement early, but they’re failing to follow through, and this is largely due to psychological obstacles, according to a new report from BMO Retirement Institute.

The report, which is based on a survey of more than 2,000 Canadians conducted by The Strategic Counsel, shows that while almost 90% of Canadians feel retirement planning should begin early, 40% of adults age 35 and older have done little to nothing to prepare for the day they leave the workforce.

Behavioural finance theories may partly explain why Canadians are procrastinating from planning, the report suggests. It points to such decision-making influences as immediate gratification, which causes individuals to place less value on a reward in the future than a benefit in the present, often encouraging procrastination.

Indeed, more than 80% of the adults surveyed who had not begun saving said they were more concerned about their current needs.

Paralysis of choice could be another factor at play. When an individual is faced with an over-abundance of information, the report says this can result in the inability to choose at all.

“More is not always better when it comes to decision-making,” the report says.

The survey results verified this theory: more than one-third of the adults surveyed admitted that they are overwhelmed by too much information, and that this has been an obstacle to their retirement saving plans.

“While it’s often hard to act against our natural instincts, it’s critically important that Canadians take an active role in planning for their future and start as early as possible,” says Tina Di Vito, head of BMO Retirement Institute. “Understanding the psychological barriers to effective retirement saving is the first step to overcoming them.”

Canadians’ individual circumstances also have an impact on their saving habits. Specifically, the report found that Canadians between the ages of 35 and 44 were less likely to be on track with saving for retirement. The survey showed that this group is most likely to have debt, most behind in their planning and is most dissatisfied with the amount they have saved.

“Clearly, this age bracket represents a period when people are buying houses, paying mortgages and raising children, and the thought of diverting funds to retirement takes back seat,” the report says.

Those with children under the age of 18 are also less likely to view retirement savings as a priority, and are more likely to put a bonus or raise towards debt reduction.

Worst off when it comes to retirement planning are lower income individuals, according to the report.

“When it comes to retirement planning, savings and expectations, lower income respondents registered the weakest scores,” the report says. “There is a clear and significant divide between those in the lowest household income category ($40,000 to $80,000 in The Institute’s survey) and the highest ($120,000+).”

The survey showed that lower income respondents were particularly overwhelmed by the volume of information available.

“The idea of starting a regular retirement savings program can be overwhelming for many people,” said. Di Vito.

Advisors can get clients on track with saving for retirement by motivating them to start saving early – even if only in a small way, to create a budget and control spending, to set financial goals and regularly monitor progress, and to make full use of tax-favoured investment vehicles.