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Posthaste: Canadians would trade pay for a pension as interest rates hit retirement dreams Back to video

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Elevated interest rates are an ongoing thorn in Canadians’ sides, leaving them staring at a “bleak” retirement outlook, according to a new survey.

The survey by Abacus Data, on behalf of the Healthcare of Ontario Pension Plan (HOOPP), said dire retirement outlooks continue to haunt people, with almost half saying they haven’t been able to save anything for retirement in the past year, while 58 per cent said they worry about not having sufficient funds to retire on.

Even if rates go down “slightly this year,” 61 per cent said they will continue to impact their ability to set aside money for retirement.

“The results of this year’s survey demonstrate that persistently high interest rates and a rising cost of living continue to have a significant negative impact on Canadians’ ability to save and manage the cost of daily life, threatening their retirement preparedness,” HOOPP said in a press release.

This is the sixth year of HOOPP’s survey that asks 2,000 adult Canadians how they feel about their retirement prospects, and the picture isn’t pretty.

Interest rates have started to fall after the Bank of Canada recently made its first cut in four years to bring its benchmark lending rate down 25 basis points to 4.75 per cent.

Economists at Canada’s big banks expect policymakers are on track to cut by another 75 basis points to four per cent by year-end.

“Over the last few years, we’ve seen Canadians struggle to keep up, first with inflation and now with interest rates and the cost of living,” David Coletto, chief executive of Abacus Data, said in the release. “But a small cut in interest rates won’t provide enough relief for Canadians.”

In a sign of how worried Canadians are about their retirement prospects, 70 per cent say they would give up some of their pay for a better pension or any pension.

The tougher financial landscape has made retirement just a pipe dream for some, with 13 per cent of non-retired Canadians saying they don’t think they’ll ever retire and 26 per cent indicating they plan to keep working after retiring.

In an effort to make retiring a reality, 42 per cent of people — up four percentage points from last year’s survey — are counting on the sale of their home to create a retirement nest egg. And 40 per cent of homeowners aged 55 to 64 — up six percentage points — have a similar plan.

The survey also said women are struggling more than men to secure their retirement future, with 53 per cent of non-retired women indicating they have not set aside any money for retirement in the last. year, compared with 45 per cent of men. And 61 per cent of these women don’t have a planned retirement age, while 50 per cent of men do.

Women also said they have less capacity to save, vaulting day-to-day financial concerns ahead of retirement.

Older women have it even tougher, given that 62 per cent of non-retired women aged 55 to 64 don’t feel prepared for retirement, compared with 48 per cent of men.

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Economic uncertainty and a rising unemployment rate are making Canadian workers think twice about switching jobs, a phenomenon that has been dubbed “The Big Stay.”

According to Statistics Canada’s latest Labour Force Survey released on June 7, the job switching rate was just 0.41 per cent in May. That’s more than a 41 per cent decrease from its 0.69 per cent monthly average prior to the pandemic in 2019. — Denise Paglinawan, Financial Post

Read the full story here.

• Today’s Data: Canadian retail sales for April, U.S. existing home sales, manufacturing and services PMI
  

• One in four Canadian renters plans to buy a home despite financial hurdles, Royal LePage finds
• Bank of Canada governors were in agreement on June cut, deliberations show
• Canada’s population topped 41 million. But is this the rise before the fall?
• Note to CMHC: Extended amortizations help mitigate mortgage risks

Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth, talks with Financial Post’s Larysa Harapyn about what Canadians can expect when the capital gains tax inclusion rate rises on June 25, how to minimize the tax beyond that date, and more. Watch the video here.

FP Answers

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at aholloway@postmedia.com with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here 

Today’s Posthaste was written by Gigi Suhanic, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.

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