Nearly one third of Canadians have no retirement savings

A fact-filled article by Nicole Blair for the Made in CA blog reveals some statistics – some positive, others a bit grim – about the retirement savings and income habits of Canadians.

She starts by posing this classic question – “have I saved enough money to retire comfortably?”

It’s a hard one to answer, but let’s dive into this well-researched piece.

Last year, she writes, 6.2 million Canadians received Canada Pension Plan payments. The average amount received, including Old Age Security, was $15,159, she continues.

She then looks at the main retirement savings vehicle in this country, the registered retirement savings plan (RRSP).

“Canadians,” she writes, “should save between $700,000 and $1 million for their retirement.” She later adds that you should save enough to replace 80 per cent of your “current spending… to maintain your current lifestyle once retired.”

To that end, 69 per cent of us have opened RRSP accounts. As well, she notes, “in 2019 there were over 6.4 million registered pension plans.. in Canada.”

However, not everyone has an RRSP or belongs to a workplace pension plan, and not all of us have savings, Blair notes.

“Almost a third of Canadians have not saved or thought about retirement,” she writes. “People living alone find saving for retirement harder than the average,” she continues. A total of “62 per cent of Canadians under 35 are saving for their retirement, but only one-fifth think they are on the right path to meet their goals,” she adds.

A slim “12 per cent of Generation X Canadians feel confident they will achieve their retirement saving goals,” Blair explains.

While the average amount Canadians have saved in an RRSP is an encouraging $111,922, Blair says, that figure falls short of the required amount.

“The opinion on how much you should save for your retirement varies. The average amount is around $700,000. However, some financial advisors would say $1 million is needed to retire comfortably in Canada. Of course, the amount you will need depends on where in Canada you plan to retire,” she notes.

“When calculating how much you will need, you need to consider all fixed costs as well as other expenses. Fifty-nine per cent of Canadians cannot estimate how much they would need to retire comfortably, while 50 per cent hope they will have cleared all their household debt by the time they retire,” she continues.

“A way to calculate how much you need is to take 70 per cent of your salary and multiply it by 25. The 25 represents living for 25 years after retirement. Using this formula, a person on a $60,000 yearly salary will need to save $1.05 million (70 per cent of $60,000 is $42,000, multiplied by 25 equals $1.05 million).”

This is a revealing article. The clear message that comes through is that without income from either a workplace pension plan or your personal savings, you’ll be living on a rather spartan $15,159 per year.

If you are eligible to join any kind of retirement program at your workplace, be sure to sign up and contribute at the maximum rates. If your organization doesn’t offer a pension program, consider using the Saskatchewan Pension Plan as your company’s program. SPP is open to individual members, but also organizations. Find out how SPP can help you build a strong retirement future!

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