Saving for retirement was a struggle before inflation hit the roof in this country, but over the past few years it has become even more of an uphill battle.

Higher borrowing costs, inflation and stock market volatility have added more challenges to preparing for retirement, says a new study by the National Institute on Ageing (NIA).

The largest study of its kind, according to NIA, it surveyed almost 6,000 Canadians to gain insight into growing older in this country.

While overall people 50 and older are doing well, the retirement readiness measure revealed the pressure Canadians have come under since the shock of the pandemic, the spike in inflation and the most aggressive hikes to interest rates in recent memory.

Only about a third, 35 per cent, of working Canadians 50 and older say they are in the financial position to retire when they want, while almost 40 per cent said they can not afford to retire.

Even among older Canadians, over 80, only half of those still working said they could afford to retire when planned.

“The fact that half of Canadians 80+ still working and intending to retire did not believe they can afford to retire suggests that many who stay in the labour force into very old age are doing so out of necessity rather than choice,” said the study.

The ability to afford to retire also varies significantly across the country. Quebec stands out as a province where Canadians are aging well, said the study. Almost half of people here over 50 said they could afford to retire when they want, the highest of any province.

At the opposite end of the scale is Alberta, where only 22 per cent said they could afford to retire, a decline of 10 percentage points since 2022.

“Overall, as they contemplate getting older, the rising cost of living was by far the most frequently reported concern among Canadians aged 50 and above,” said Dr. Bonnie-Jeanne MacDonald, director of financial security research for the NIA.

“Next came running out of money.”

Yet even before the challenges of COVID-19 and its fallout, Canadians had been struggling to save enough for retirement, said the study.

Today only about a third of working Canadians have some form of workplace pension coverage, compared to about half in the 1970s, it said.

Families in their pre-retirement years, aged 55 to 64, are more likely to be carrying debt than in previous decades, and older Canadians must plan for their savings to go further or risk outliving them, said the study.

Yet while the need for Canadians to build their own savings is growing, putting away for the future has had to compete with paying for higher living costs today.

NIA cites findings from the Healthcare of Ontario Pension Plan which suggest that as many as 32 per cent of working Canadians, including a fifth of those aged 55 to 64, have never set aside any money for retirement.

Almost half, 44 per cent, of Canadians did not set aside any money in the past year, that survey found, and 44 per cent of the 55-64 age group reported having less than $5,000 in savings.

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Canada’s economy picked up speed in the final months of 2023, beating expectations with 0.2 per cent growth in November and estimate of 0.3 per cent in December.

The GDP readings were a lot firmer than economists had been expecting and mean there will less pressure on the Bank of Canada to start cutting interest rates soon, said BMO chief economist Douglas Porter.

“This solid result, after a long dry spell for growth, affords policymakers the ability to gently push back on easing chatter, as they wait for underlying inflation to come down further,” he wrote in a note Wednesday.

Sure enough, after the data came out, the Canadian dollar rose and market pricing for the first rate cut shifted from April to June.

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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.

Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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