Even amid worries over rising prices and economic uncertainty, two crucial financial products are woefully underused
External concerns such as the pandemic, economic instability, and inflation have caused Canadians aged 55 to 75 to change their retirement plans – but they may be missing a couple of important pieces to ensure their financial peace of mind.
According to a new RBC Insurance survey, one-third of recently retired Canadians (33%) say they left the workforce earlier than intended, while three-in-ten (30%) pre-retirees plan to adjust their retirement date due to the pandemic.
The findings paint a picture of retirement riddled with uncertainty. More than a quarter (28%) of Canadians who have already retired are spending more than they expected, and four out of ten (41%) have had unexpected expenses, such as major home repairs (16%), healthcare or transportation costs (12%), and financial assistance to family members (12%), all of which are exacerbated by rate hikes and inflation.
"The events of the last two years are clearly affecting Canadians – including those nearing retirement," said Selene Soo, Director for Wealth Insurance at RBC Insurance. "And with the current high inflation rate added to the mix, many are feeling concerned about their purchasing power and increasing expenses. What people must remember is they can take control – good planning is critical in driving confidence around their future finances."
For more than three quarters of those surveyed (78%), the impact of inflation on savings, expenses and purchasing power is the most pressing concern as they live longer lives. Nearly half of the respondents also indicated a lack of guaranteed income (47%) and outliving their savings (48%) as crucial worries. Other concerns included outliving their spouse, feelings of loneliness, and having no financial legacy to leave behind.
To help themselves get retirement-ready, just over half of Canadians say they rely on traditional savings instruments such as TFSAs (54%), RRSPs (53%) and CPP/QPP/OAS (52%). But according to the survey, a vanishing number of Canadians said they use annuities (7%) or segregated funds (3%) in their financial planning, even though those tools can help address many of the retirement concerns raised.
"It's important to protect the money Canadians have worked so hard to save," Soo said. "But for many who may be in retirement longer than originally planned, the right tools can help ensure a guaranteed income or enough to leave behind a legacy – regardless of other external factors."
