Feb 07, 2023

By Jane Brown

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If you’re considering retirement, brace yourself for this news.

A new BMO survey says Canadians believe they need 1.7-million dollars in savings in order to retire.

That’s an increase of 20 percent from the 2020 version of the survey and is said to reflect people’s concerns about inflation and the cost-of-living.

The poll also reveals fewer than half (44 percent) of Canadians are confident they will have enough money to retire as planned, which is a 10 percent decrease from 2020.

BMO spokesperson Caroline Dabu says while the number may sound scary, she cautions many people overestimate how much they’ll need to retire.

Dabu says the best approach is to work with a financial planner to come up with your own personal retirement “number” that reflects your individual circumstances and goals.

The survey also provides insights into Canadians’ approaches to retirement planning, including:

The Golden Age: Approximately a quarter (22 percent) of Canadians plan to retire between the ages of 60 and 69, with an average age of 62.

The Contribution Picture: Among the 60 percent of Canadians with an RRSP, 68 per cent of them contributed to the account to save for retirement. Moreover, in addition to saving for their own retirement, 15 percent of Canadians contribute to the account to save and leave an inheritance for their children.

Financial Independence, Retire Early (FIRE): One fifth (20 percent) of Canadians are contributing to their RRSPs to achieve financial independence as early as possible and 15 per cent are saving towards an unexpected early retirement. If they could retire early, one-in-five (21 percent) Canadians would like to retire in their 50s.

Back to the Drawing Board:

Among the 37 percent of Canadians who had experienced a major life event since March 2020, such as starting a family, moving homes or starting a new business, 20 per cent of them had experienced a loss of income and 9 per cent had to make a large payment.

The majority of Canadians believe the state of the economy has affected their financial behaviors, including the amount they are saving (69 percent) and the money they are investing (60 percent).

Protecting the Nest Egg from Headwinds: Among the 80 percent of Canadians who rely on professional financial advice, more than half (57 percent) believe receiving professional advice is important amid current market conditions and feel that their financial advisors are better equipped to help them reach their goals (53 percent).

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