Fidelity Investments Canada has published its latest retirement report showing growing concern among those planning for their post-work lives
Canadian pre-retirees may have thought they were on course for the retirement they had always dreamed of. And then came the 2020s.
Recent years have seen volatile capital markets, economic uncertainty, and inflation that threatening to leave many retirement funds depleted.
Fidelity Investments Canada has published its latest retirement report and found that while 73% of pre-retirees are feeling positive about their retirement outlook, this is down from 80% just 5 years ago.
The cost of living is the main challenge to retiring when they planned to.
There has also been a shift in the past year in how pre-retirees are preparing their finances with 42% saying they are saving less this year compared to 2022 due to the pressures on their household budgets.
Half of respondents are choosing only safe assets to invest in, which may weaken their retirement income over the long term.
"By getting to work on a financial plan for retirement, Canadians can find some hope amid persistent negative headlines. Groceries, energy bills, clothing – these are just some of the everyday items affected by inflation, holding Canadians back from retiring when they would like to," said Peter Bowen, Vice President, Tax and Retirement Research, Fidelity.
What a difference a plan makes
The research shows that having a financial plan makes a major difference in how confident a pre-retiree feels.
More than 9 in 10 of those who have a written financial plan said they felt prepared financially for their retirement compared to just 58% of those with no written plan.
But finances are not the only important part of being ready to retire, although a financial plan influences these feelings too. Almost 9 in 10 respondents with a plan felt emotionally ready to retire compared to just 7 in 10 without a plan, and on being socially prepared those with a plan win again (84% vs. 69%).
Even being physically prepared for retirement is aided by having a financial plan according to the study – 88% of those with a plan said they were, compared to 73% of those without.
"The value in having a written financial plan is a theme we see year after year, and yet the majority of Canadian's don't have one, added Bowen. “The ones who do are working with a financial advisor, and overall, they're developing healthier saving and investing habits.”
Of those respondents with a written financial plan, 82% worked with a financial advisor and were twice as likely to say they had peace of mind that their financial goals are on track as those who did not get an advisor’s help.
