Demographic storm could crush retirement plans: report
By Shannon Proudfoot, Canwest News ServiceJune 10, 2009
A “perfect storm” of demographic, financial and individual factors will derail people’s retirement plans if they don’t change course, according to a new retirement report.
The fifth annual Future of Retirement survey uncovered an “alarming” lack of financial preparedness on the part of Canadians, according to HSBC Insurance, which conducted the survey. But it also reveals glimmers of optimism when it comes to economic recovery.
While only 17 per cent of Canadian respondents said they feel very well prepared for retirement and not in need of any advice, 83 per cent have done some or no planning and admit to being “unsure of what my retirement income looks like.”
Asked what the government should do to support and finance an aging population, 48 per cent of Canadians support encouraging more private savings through tax relief on those savings.
This “may highlight the fact that people in Canada have already come to accept that they are responsible for their retirement income and look to the government more as an enabler,” HSBC concludes.
“The era of great personal responsibility is already well-established,” the report says.
Twenty-three per cent of Canadians, meanwhile, advocate for compulsory employee pension contributions, 16 per cent like the idea of increasing the retirement age and supporting people who want to work longer, and six per cent favour encouraging more private savings by automatically opting people into workplace schemes.
Just seven per cent support increasing taxes to pay for better state pensions or social security.
Canadians said they are coping with the economic downturn mainly by cutting back on dining in restaurants, socializing and buying clothes (12 per cent) and big items (12 per cent), reducing their consumer debt (10 per cent) and looking for a better-paying job or more hours at their current work (10 per cent).
At the same time, 10 per cent said they don’t plan to change anything at all.
When asked how long they predict the downturn to last, almost half (45 per cent) of Canadians said one to two years. Just more than one-quarter (26 per cent) said six to 12 months, four per cent predicted six months or less, 17 per cent said two to three years and nine per cent said three years or more.
A surprising 14 per cent say they don’t think the downturn will affect them personally at all.
The Future of Retirement survey was conducted by UK-based HSBC Insurance in March 2009. This year it included 15,000 respondents aged 30 to 70 from 15 countries, including Canada, the U.S., UK, France, Japan and China.