OCT 17: BEST FROM THE BLOGOSPHERE
October 17, 2022
A new negative twist from inflation – it’s cramping our ability to save
We’re all aware of the terrifying ups and downs we see for the price of things like gas and groceries, but a new study suggests inflation is also cramping our style when it comes to saving.
The study, carried out by BDO Debt Solutions, was summarized in a recent media release.
“The survey, which examines the affordability and financial health of Canadians, found more than three-quarters of Canadians (78 per cent) say their personal finances have worsened due to inflation, while just over half (54 per cent) say they’re living paycheque to paycheque – an increase of three percentage points over 2021,” the release notes.
On the savings front, the news is just as grim.
“Six in 10 Canadians are also either saving less, or not at all – especially for retirement – than they were in 2021,” the release reports.
“With inflation and rising costs, affordability challenges have returned to, and in some cases, surpassed pre-pandemic levels. It’s concerning to see that Canadians are experiencing more financial difficulties today compared with the last three years,” states Nancy Snedden of BDO Debt Solutions in the media release.
Costs are rising for households, the survey results note. More than one-third of Canadians – 35 per cent – say “it’s challenging to feed themselves and their family,” while 52 per cent are finding the cost of transportation “difficult,” the release continues.
Since the cost of essentials like food and transportation has jumped, there is less money left over for saving, the release explains.
“More than four in 10 Canadians have also cut savings for retirement, while 71 per cent say saving for retirement is a challenge – an increase of six percentage points over 2021,” the release states.
“As a result, 64 per cent of Canadians now say they are not on track to save enough for retirement – a jump of four percentage points in the last year – of which nearly half say they are very far behind. Among those aged 18 to 24, more than two-thirds (67 per cent) say they have no retirement savings at all,” the release adds.
“Overall, 32 per cent of Canadians say they have no idea what their retirement plan will be, and one-third claim they will never stop working (through part-time/occasional work), despite wanting to retire,” the release concludes.
If the solution is to continue working rather than saving, it’s worth noting that a recent Global News report found that retirements are up in high-pressure job sectors like “healthcare, construction, retail trade, and education and social assistance.” Most are retiring before age 65, the article notes, and the overall retirement rate is up 32 per cent over last year.
From that, one can infer that those who want to keep working instead of saving for retirement may find the work too stressful to carry on past 65 as planned – alternatively, they could find they aren’t healthy enough to continue working long into old age. That underscores the need to insure yourself against future money shortfalls through retirement savings.
If you can’t afford to save as much as before, that’s understandable. But save what you can, because those savings will provide future income that will help your “20 years down the road” you to cover the cost of living.
If you have a pension or retirement program at work, be sure to contribute to the max. If you don’t – or you want to bolster the savings plan you have – take a look at the Saskatchewan Pension Plan.
With SPP, you can start small, and tick up your savings when better times return. SPP can grow those savings and turn them into a source of retirement income when work is done. Check them out today!
Join the Wealthcare Revolution – follow SPP on Facebook!
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.