Fewer Canadians saving, planning for retirement

Fewer Canadians are putting money into retirement plans, according to the Royal Bank’s annual RRSP poll.

Fewer Canadians are putting money into retirement plans, according to the Royal Bank’s annual RRSP poll.

Canada’s largest bank said Wednesday that 32 per cent of Canadians have not started saving for retirement yet, compared to 24 per cent in 2008.

The study also found only 36 per cent say they are planning or have planned for retirement, down from 42 per cent in 2008.

The study does not say what the reasons are for the decline in RRSP investment intentions. But economists have noted that one reason may be the recession, which has pushed up the jobless rate and squeezed Canadian living standards, leaving less money for investing.

As well, high household debt may be making consumers more skittish and cutting their spendng and investment intentions.

On Wednesday, Bank of Canada governor Mark Carney issued another caution to Canadians and the chartered banks, warning that interest rates are going up and they should be careful about adding too much debt.

Expanding on previous warnings, the bank governor told a business audience in Toronto that the current low interest rate environment may be luring Canadians to borrow too much, and banks to extend loans they will later regret.

The Royal said consumers need expert advise on retirement strategies, especially in the current economic environment and growing concerns about the future health of corporate pension plans, which many companies say they can no longer afford.

“With the recent economic uncertainty, we understand it may have been difficult for many Canadians to focus on planning for retirement,” said Lee Anne Davies, head of retirement strategies for Royal Bank.

“It’s not easy juggling many financial priorities especially during challenging economic times. That’s why we recommend working with an adviser to review both your personal and financial goals, as well as consider the unexpected that may impact your lifestyle, and develop a realistic plan of action.”

In its report, the Royal said the decline is sharpest among those aged 55 and over, with 53 per cent doing any retirement planning compared to 67 per cent last year.

RBC also says just 35 per cent of Canadians have contributed to or plan to contribute to an RRSP for the 2009 tax year — the lowest percentage of contributors since 1996.

And, among those with an RRSP who are not contributing this year or who are reducing their contribution, 54 per cent say it is because of current economic conditions.

The RBC poll of 1,457 people was conducted between Oct. 21 and Nov. 2, 2009. The margin of error is plus or minus 2.56 percentage points 19 times out of 20.

Such surveys are a popular promotional tool for Canada’s banks and mutual fund companies. Many use public opinion polls to gauge demand for financial products and services, promote specific brand names and learn more about the public’s financial management habits.

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