Retirement savings among cutbacks as Canadians tighten their belts

Nine in ten Canadians are now reducing their spending including a quarter who are cutting back on retirement savings.

The findings of a newly-published survey from the Angus Reid Institute show that most people believe that their finances have worsened over the past year with few expecting improvement in the coming year.

More than half expect interest rates specifically to have a negative impact on their finances over the next six months.

The share of those tightening their belts has increased eight percentage points in a month with discretionary spending (66%) and major purchases (50%) most likely to be on hold.

But for more than one quarter of respondents, pressure on finances mean deferring contributions to retirement or savings. This cohort has risen to 26% from 19% in just six weeks.

Despite the Bank of Canada’s rate hikes being a key factor in this weakened sentiment, respondents are split on what they think should happen next: 33% want the bank to put rates on hold, 20% think they should go higher, and 23% think they should be cut.

Better or worse?

Almost half of respondents believe that their finances are worse now than one year ago. This rises to 49% among the lowest income band (below $25K), 52% among the $25-49K cohort, and 47% for those earning $50-99K.

For higher income groups, the share who say their finances have worsened is below average, falling to 36% for those in the $200K+ band.

Four in ten respondents think their finances will be about the same in a year from now, 30% expect them to be worse, and just 21% expect improvement.

Putting food on the table

With food costs rising, survey participants were asked how easy or difficult it is to feed their family.

In March 2019, 62% said it was easy. In September 2022 that has fallen to 42%. The share who say it is difficult has risen from 38% to 51% over that same time and has risen 6 percentage points since October 2021.