Feb 8: BEST FROM THE BLOGOSPHERE
February 8, 2021
Canadians worry they aren’t saving enough for retirement
New research from Scotiabank reveals that a surprising 70 per cent of Canadians “admit it’s hard to know what to do when it comes to their investments” in the current pandemic environment.
Even more interesting for Save with SPP readers is the news that the pandemic is causing Canadians to “rethink their retirement.”
“The majority of Canadians who have not yet retired are worried they are not saving enough for retirement (72 per cent), one third (32 per cent) say they won’t be able to retire when they had planned because of the pandemic, and 28 per cent report they won’t be able to pay off their debt before retirement,” says a media release accompanying the Scotiabank research.
That’s quite the trifecta. So not only are three quarters of us not saving enough, a third of us won’t retire when we hoped and nearly 30 per cent will have to pay off debt with reduced retirement income.
Scotiabank advises us to “identify our goals” when it comes to saving, and to seek the help of a financial adviser.
But there may be other things to think about here.
A report from Wales Online adds another puzzle piece. In the U.K., the article says, more than 150,000 folks aged 55 to 64 have been forced “to retire early because of the pandemic.” The reasons why they are leaving the workforce include “redundancy and income cuts, a desire to reduce the risk of coronavirus exposure, and reassessing priorities in life due to the pandemic,” the article says.
So they are being laid off (made redundant is how the Brits describe it), getting their hours cut, or simply fear getting sick in the workplace as older workers. A few are “reassessing priorities” which may mean looking for things to do that aren’t work. The key point here is that this is all an unplanned departure; they are into retirement earlier than they planned, and not necessarily by choice.
Clive Bolton of LV=, the firm responsible for the research, sums it up very nicely.
“Early retirement is a dream for many people but it can become a financial nightmare if it is forced on people without them having time to prepare.” He goes on to say “your 50s are critical years for retirement planning because that is the age when many people’s earnings and pension contributions peak. Being forced to end a career before you planned will disrupt retirement plans.”
We’ve seen how most of us have to choose between paying down debt – which helps us in the short term – and saving for retirement, which helps us in the long term. And while the pandemic won’t be with us forever, it will be here long enough to throw peoples’ retirement plans into a bit of chaos. We may have to go before we’re ready. How do we prepare?
If you’re among the many Canadians who are not saving enough for retirement, there’s a remedy close at hand. The Saskatchewan Pension Plan can provide you with an easy, flexible and effective way to save. At press time, the estimated rate of return in 2020 for SPP – a year that saw market turmoil – was an impressive 8.72 per cent, and the SPP has averaged a return rate of 8.00 per cent since its inception 35 years ago. You decide how much to contribute and you can ramp up your savings as better times return. Check out SPP today.
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.