A recent survey highlights a significant disconnect between the retirement savings expectations of working Canadians and the actual financial realities faced by retirees. According to a report by the Colleges of Applied Arts and Technology Pension Plan (CAAT), only 15% of retirees rely on their savings as their primary income source, compared to 25% of working Canadians who believe they will.
Retirees Depend Heavily on Government Pensions
The report reveals that 58% of retirees depend on the Canada Pension Plan (CPP) and Old Age Security (OAS) for their income. This reliance underscores a major challenge: many Canadians struggle to make long-term decisions about saving, investing, and converting savings into reliable retirement income.
Misconceptions About Pension Plans
One common misconception is that pension plans are merely a bonus. However, the data shows a stark difference: retirees with pensions earn an average of $85,735 per year, while those without earn just $52,570. This gap highlights the critical role of workplace pensions in ensuring financial security.
Retirement Age Disconnect
There is also a mismatch regarding retirement ages. Most Canadians consider 60 as the ideal age to retire, but they expect to retire at 67. The report notes that instead of increasing savings or changing planning behavior, Canadians tend to delay decisions and push retirement further out, assuming they will have more time to save.
Challenges in Saving for Retirement
Saving remains a struggle for many. Among those earning $50,000 or less, 60% are not saving for retirement at all. Additionally, 38% of workers without a workplace pension take little or no action toward saving. The lack of proper tools is evident: 68% of retirees wish they had started saving earlier, and 58% of working Canadians say the absence of a workplace pension limits their ability to save.
Support for Policy Changes
Despite these challenges, Canadians largely understand that government pensions alone are insufficient. Ninety percent would support policies designed to make retirement savings easier to accumulate. The report calls for a rethinking of the retirement system to better reflect actual behavior, provide predictability, and make retirement more navigable. Expanding access to defined benefit workplace pensions is one suggested solution.
