Canadians Not Saving Enough for Retirement: Study

A recent study by The Broadbent Institute, An Analysis of the Economic Circumstances of Canadian Seniors, revealed that we are collectively not saving enough for retirement. This is due to a number of factors, including increased life expectancy, and the fact that almost half of Canadians do not have an employer-funded pension plan.

Every time a story like this breaks in the media, it’s easy to think that as one of those Canadians, you aren’t doing enough to provide for your own future. However, a number of factors that lead to this lack of retirement savings are completely beyond your control.

Many Canadians approaching retirement age find themselves on company chopping blocks as high-salaried employees in a recession. If you were working in the oilpatch, you may be dipping into your RRSP or TFSA to cover the costs of essentials until you can find another job. You or your spouse may have an unexpected health issue. Adult children may have had sudden job losses that necessitated the need for a loan from you. Divorces can torpedo savings. The list goes on.

We’re Good With Money When we Have it

Realistically, we’re good at paying down debt and saving money when times are good. When times aren’t good, paying down debt becomes a priority and we may not save as much. It’s really that simple. No amount of solid financial planning and fiscal responsibility can help if you have something sudden happen to you that throws your best-laid plans off track. The study claims that 15-20% of Canadians without a pension have put aside enough for retirement, which means that the drive is there – just not necessarily the means.

How Can I Save More Money?

RRSP loans are a great way to save money – they are often very low-interest and the banks will generally have no issues with offering them to you as long as your RRSP is also held with them. Just make sure you can sustain the monthly payments – some Canadians even pay them off when they get their tax returns. They are essentially a way to force yourself to save money, and they do come with an interest cost, but it’s better than not saving anything at all.

Another way is to take an honest look at your household expenses. Programs like can tap into your bank accounts, credit cards and more to give you a transparent look at your financial picture from a number of sources. Once information starts to accrue, you’ll see how much you spend on restaurants, how much you spend on groceries, how much you spend on incidentals, and so on. This will enable you to lay a firm groundwork for a realistic budget and see where you are spending more than you should. A simple thing like eating at home more often or bringing your own coffee with you in the morning can net you a significant savings.

Should I Pay Down Debt or Save for Retirement?

The answer from most financial experts is both, but there is probably a more nuanced answer specific to your situation. For example, if you have high interest debt, paying it off will free up money that may have gone towards interest payments. If you are struggling with making ends meet, paying down debt, and saving, it doesn’t hurt – or cost as much as you think – to consult with a financial advisor. They will help you develop a concrete strategy that will tell you exactly what to do.

Reverse Mortgages are an Option

Reverse mortgages are an option for retirement planning, one that more financial advisors are recommending to help bridge the gap for those close to retirement with few savings. They are available to anyone over the age of 55 who owns enough equity in their home, and require no monthly payments. They are only repayable when the home is sold.

Contact Horizon Equity today to see how a reverse mortgage can fit into your retirement plan.