The 2023 RRSP season was an opportunity to better measure the impact of inflation on morale and expectations. We have seen that pre-retirees have never been so uncertain about their ability to maintain their standard of living after work. Simple perception, what all this?
We know the background. A Léger survey carried out for the Canadian Federation of Independent Business, published in January, indicates that 72% of respondents say they are worried about the economic situation in Quebec. And 37% say they are afraid of losing their job or that people around them will lose their jobs due to the economic slowdown or even a recession.
Another survey, this time from Scotiabank, highlights that, even if inflation is slowing, 70% of Canadians remain concerned about the impact of the remaining high cost of living on their finances. This gloom, however, hits older people, with 50% of Generation Z expecting their personal financial situation to be stronger in six months compared to 23% of all respondents.
In a blog from Financial Post, it is noted that more than half of Canadian investors focus their attention on paying their bills rather than on their savings. Moreover, investments are more conservative for 47% of respondents to a CIBC survey, who say they are looking for predictable income rather than growth potential in the current economic environment. Short-term liquidity and predictable investment income do not prevent them from still aiming for retirement at age 60. But also to admit, for half of them, that they cannot save for their retirement. Another 57% are concerned about not having enough savings to meet their retirement needs, the survey adds.
In another survey, this time conducted by the National Institute on Aging Canada among some 6,000 respondents, we learned that only 35% of Canadian workers aged 50 and over say they are in a financial position to retire when they want. In contrast, 40% say they cannot afford retirement. The constant rise in the cost of living is the most frequently cited reason. Follows the fear of running out of money.
Small consolation: Quebec stands out, with nearly 50% of workers aged 50 or over saying they can retire whenever they want, the highest rate among the provinces, underlines the think tank.
Pure perception?
Pure perception, what is all this? This reality was not without sweating in the Employment report 2013-2023 from the Institute of Statistics of Quebec (ISQ), which measured a gain of around 40,000 jobs among people aged 55 and over last year. Of course, there is an aging population. Nonetheless, this group crossed the million jobs mark last year and represents approximately 22% of all jobs in Quebec. For the period 2013-2023, employment growth reached 34.6% in this group, while it was only 6.5% in that of 25 to 54 year olds, noted The Canadian Press. As for the employment rate, it stood at 62.1% in 2023, its highest level historically. It stands at 86.9% among 25-54 year olds, 51.9% among 55-69 year olds. “Finally, the unemployment rate (4.5%) has reached its lowest level since 1976 among 15-24 year olds (7.5%) and among those aged 55 and over (4.4%),” adds the ISQ.
A study by the consulting firm Deloitte indicates that nearly three million Canadian households will retire over the next decade. “Our results show that 55% of households nearing retirement will have to compromise on their lifestyle to avoid outliving their financial savings. » With the observed stagnation in the growth of retirement savings, the retirement readiness gap is widening, which increases their financial vulnerability.
Deloitte adds that, for many people, “saving for retirement has become an ever-present concern.” As for retirees, with rapidly increasing costs, including health care costs, and increased longevity, they are “taking on more debt,” which increases the risk of emotional exhaustion and the risk of outliving their retirement savings. .
More precisely, according to the firm’s mapping, 429,600 families in the pre-retirement segment can retire with confidence, or 14% of pre-retired households. Also, 540,000 can retire, but must make compromises, or 18% of families making up this segment. On the other hand, more than 1.1 million households are at risk of not being able to maintain their lifestyle in retirement, or 37% of pre-retired households, and 924,000 must rely only on public plans, or 31% of the total.