July 21: BEST FROM THE BLOGOSPHERE 

July 21, 2025

Most Canadians “financially prepared for retirement” if they stick to the plan: HEC

More than four-fifths of working households in Canada “would be financially prepared for retirement if their intended retirement age and saving strategies are realized,” according to research from HEC Montreal’s Retirement and Savings Institute.

Results of the study were covered off in a recent article on Advisor.ca.

“The report defines financial preparedness as households that can replace at least 65 per cent of their net income in retirement after taxes, transfers, savings and debt payments, or for households in the lowest income quintile, 80 per cent,” the article notes.

The study, the article continues, takes into account “both private and public sources of retirement income, with the latter being most important to middle and low-income groups.”

The research, based on data from 2022 is “little changed” from a previous study using 2018 data. “Only 18 per cent of households have less than an 80 per cent chance of being prepared,” the article notes.

Pension plans make a difference in retirement preparedness, the article continues.

“Prepared households are more likely to have a defined benefit (DB) pension plan, earn lower income and expect to retire later,” the article explains. However, the study says that the preparedness level could drop if “the generosity of DB pensions decreased…. in the next decades, it is possible that the coverage and generosity of DB plans will be eroded.”

OK – so who is most as risk for not being financially prepared for retirement? Let’s read on.

“Households most at risk of being unprepared have higher than median income and no savings, with a 52 per cent chance of being prepared for retirement. On the flip side, those earning below the median income who also have no savings have an 89 per cent chance of being prepared,” the article notes.

Let’s unpack some of this.

If you aren’t a high-income earner, government benefits will provide a pretty good replacement ratio of your pre-retirement income. Our late sister reported to us that she was actually better off once her Canada Pension Plan and Old Age Security benefits kicked in.

And she was right. For those making a modest income, the modest government benefits are pretty good, providing an income close to what you were making before. But those with higher incomes will find that CPP and OAS benefits, even at the maximum, are quite modest.

If there’s a pension plan available at your workplace, be sure to join it and contribute as much as you can. If you haven’t started saving for retirement on your own, and don’t have a workplace plan, the Saskatchewan Pension Plan (www.saskpension.com) may be just what you’ve been looking for.

With SPP, you decide how much to contribute, and SPP does the heavy lifting, growing your savings through professional investment in a low-cost, pooled fund. And when work is in the rearview mirror, SPP members can choose the security of a monthly annuity payment for life, or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Advisor.ca

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