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Retirement planning equals "wait and see" for most Canadians, says TD Waterhouse 2008 RSP Investor Poll

7 minute read
By TD Bank Group
• Feb. 12, 2008
- Few have formal retirement plan or know how much money they'll need in retirement - Canadians' confidence in their ability to retire comfortably is declining - Men think they need 59% more money than women to retire - BC residents say they need 90% more money to retire than Quebecers do TORONTO, Feb. 12 /CNW/ - While the vast majority (87%) of adult Canadians hold RSPs, few (14%) have a retirement plan outlining their financial goals and how they plan to achieve them. Less than one-third (31%) have ever tried to calculate how much they will need to retire comfortably. These are some of the findings of the 2008 TD Waterhouse RSP Investor Poll. Consistent with this lack of preparedness, Canadians' level of confidence that they will be able to retire comfortably has significantly declined, with 73% of poll respondents saying they are at least "somewhat confident" versus 84% who said that a year earlier. "An RSP is the cornerstone of saving for retirement, but it shouldn't be confused with a retirement plan," says Patricia Lovett-Reid, Senior Vice-President, TD Waterhouse. "There's a growing focus on the changing face of retirement - how people are living longer, more active lives and expecting more from this stage of their lives, but there's not enough serious goal-setting or discussion about how one's retirement will unfold." "A retirement plan helps people answer such questions as whether or not they plan to continue working, where they'll be living, what their ongoing family responsibilities will be and what activities they'll be pursuing with their leisure time," continues Lovett-Reid. "By understanding these key factors, people can then map out their income and expenses more accurately and create a personal retirement income plan." Although those closer to retirement - aged 50 to 69 - are more likely than their younger counterparts to have a written retirement plan, it's still a relatively low number who do at 18%. The need for a retirement plan is underscored both by poll findings and by Canada's changing demography. More than half (55%) of non-retired investors believe they are likely to require professional assisted care at some point during their retirement - although half of this group are unsure whether they will be able to afford it. According to the Canadian Institutes of Health Research (CIHR), there will be 6.7 million Canadians over age 65 by 2021, and by 2031 a quarter of the population will be over 65. Canadians also have one of the highest life expectancies in the world. A 65 year-old Canadian woman can expect to live an average of 20.8 years longer; a 65 year-old man, 17.4 years. Most Canadians will enjoy good health for about 13 years past age 65. The TD Waterhouse RSP Investor Poll results support the portrait of the active retiree. 85% of respondents say they will travel, and the same percentage plan to take up a new hobby. Close to two-thirds (63%) consider it likely that they will be involved in caring for grandchildren, and 44% believe they will be caring for elderly parents. "What these numbers tell us is that income needs in retirement will vary," says Lovett-Reid. "Future retirees will likely spend more in the early years as they travel, pursue new hobbies and help with grandchildren or elderly parents. Spending may taper off as they become less active, but with many more Canadians living well into their eighties and beyond, their spending needs will also increase dramatically in their latter years as they require assisted living and other eldercare services." "The implication is that one's retirement plan must be sophisticated enough to allow for these varying income needs - and that is why it is so important to consult with a financial professional to ensure this financial flexibility is built in." 57% of poll respondents were able to provide an educated guess as to how much money they would need to retire comfortably. Among this group, the average amount is $727,000. However, there is a huge gender gap between responses, with men saying they need $848,000 or 59% more money than women at $532,000. There is also a wide variation among regions and ages groups regarding how much is needed to retire comfortably. BC residents feel they need a $923,000 nest-egg, 90% more money than Quebecers at $486,000. Canadians under the age of 34 believe they need $933,000; those between 50 and 69 feel they need about half that amount ($477,000). Other poll findings: - Almost two-in-three respondents (64%) plan to retire at or before age 65. - Among investors who are less confident in their ability to save enough money to retire comfortably, two-thirds (66%) cite an inability to save as their primary obstacle. This is being driven by investors who indicate that their debt load is too high for them to accumulate savings, a group that has increased significantly since 2006. - Regarding the sources of income Canadians will rely on most to finance retirement, personal savings and RSPs are mentioned by the majority (over 80%) of non-retired investors - with just over half mentioning government administered sources of income, such as the CPP or Old Age Security. - However, younger investors (those under 50 years of age) state significantly less reliance in the government pension or CPP and are significantly more likely to count on their own savings and RSPs relative to older investors. - Women are more worried about retirement than men: - 69% are concerned about keeping healthy and active, compared with 60% for men. - 51% worry about being able to maintain their current standard of living after retiring, versus 9% for men. - 49% are concerned about outliving their retirement savings, versus 35% for men. - 40% worry about becoming a burden to their families, compared with 27% for men. - More than half (55%) of investors under the age of 35 worry about outliving their money, compared with only 29% of investors over the age of 50. "The profound demographic shift taking place in Canada is forcing many of us to rethink how we plan and prepare for retirement," concludes Lovett-Reid. "Still, the gap between aspiration and preparation continues to be wide. Most people want to retire fully at or before age 65. Yet this year's poll shows Canadians are becoming less confident in their ability to retire comfortably, and very few have taken the step of developing a formal plan. It's not easy to envision your future, which is precisely why it's important to sit down with a professional who will ask the right questions and help you develop a plan." The on-line survey was conducted by TNS Canada Facts from December 14-27, 2007 with 1,077 Canadian investors across Canada between the ages of 18 and 69. The results are accurate to within +/- 3.1%, 19 times out of 20. About TNS TNS is one of the world's leading market information groups, providing market measurement, analysis and insight through its operating companies in 70 countries. Working with national and multi-national organizations, we help our clients develop effective business strategies and enhance relationships with their customers. In Canada, TNS Canadian Facts provides full-service, primary market research. Its mission is to become clients' sixth sense of business(TM) by giving them a deeper understanding of their customers' behaviour, better anticipation of their actions and greater insight into what they really want. About TD Bank Financial Group The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group serves more than 14 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking through TD Banknorth; and Wholesale Banking, including TD Securities. TD Bank Financial Group also ranks among the world's leading on-line financial services firms, with more than 4.5 million on-line customers. TD Bank Financial Group had CDN$422 billion in assets as of October 31, 2007. The Toronto-Dominion Bank trades on the Toronto and New York Stock Exchanges under the symbol "TD", as well as on the Tokyo Stock Exchange. For further information: Stephen Ledgley, NATIONAL Public Relations, (416) 848-1376, sledgley@national.ca

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