Canada's Condominium Magazine
Onward and downward seems to be the direction of the day. The loonie is down. Stock markets are down. Interest rates are down. Oil prices are down. Employment is down in some areas. It’s enough to depress a person. It looks like that rainy day we’re supposed to have saved for is here. How much worse could things get?
It turns out that a (slim) majority of Canadians (54 per cent) have made saving for the long term, i.e. retirement, their top financial priority in the face of all the economic gloom. Financial independence at retirement is Number One on the top ten list of financial priorities, ahead of “general saving for a rainy day,” home ownership, home renovation, and just keeping one’s head above water. Retirement saving tops making regular payments to eliminate debt, saving for a large and rewarding purchase, and building an investment portfolio. Children’s education is a distant ninth on the list. Supporting aging parents barely makes it, though it has gained some ground since 2008, perhaps a reflection of the increased age of the responders.
The responders were responding to RBC’s latest Financial Independence in Retirement Poll, the twenty-sixth annual version of it, conducted by Ipsos.
Aside from the declared priorities of respondents, the poll reveals what Canadians are actually doing to achieve them. In a lot of cases, not much, or nothing at all. In order to save effectively, RBC points out, the saver should have a financial plan. Finding the right balance between today’s needs and future needs is a necessary part of that plan. Young people aged 18–29 and those aged 40–49 seem to have the greatest difficulty with this. The majority say they want to pay off their existing debts and save for a rainy day, as well as save for retirement, but most of them have no plan for doing so. This, says RBC, is a recipe for stress. Consumer research, the banks says, shows that there is a “direct link” between having a financial plan and feeling more comfortable about one’s future. Having a plan, says the bank, is a great way to “make your dreams a reality.”
The most popular form of retirement saving in Canada remains the RRSP; 55 per cent of Canadians own them, the same number as one year ago. However, if we were limited to just one option for retirement savings, more would choose a tax free savings account than an RRSP, according to the survey.
Almost one-third of Canadians (31 per cent) have not yet started saving for retirement.
According to RBC a good financial plan should
- Address personal goals, needs and priorities
- Cover the current situation
- Include financial planning areas that are relevant to the saver, such as taxes, investments, cash flow, retirement, borrowing and debt management
- Evaluate the strategies that will help meet goals
- List action steps: what needs to be done, by whom and when
- Act as a guidepost to track progress