Financially Excluded Canadians Are Not Planning for Their Retirement

With the RRSP season in full swing and the tax season just around the corner, financial planning is top of mind for many Canadians. However despite all the attention in the media about the ever looming and less-than-ideal economic state we are in, not all Canadians have jumped on the retirement planning wagon.

The results of our eNation survey conducted in late January 2014 show that half (49%) of Canadians do not have a retirement fund - a broad definition including all funds whether in registered savings plans or not. Among these, about half (28% of total population) are thinking about it and plan to have one in the future. The "financially excluded" - those who do not have a retirement fund in place and do not have plans of having one constitute a whopping 21% of the total population.

Which of the following best reflects your current situation? Please note that 'retirement fund' refers to all funds, whether in registered savings plans or not, that you expect to use in your retirement. This would also include funds you might get from selling real estate.

Lower education attainment and income appear to play a big role in deferring Canadians' planning decisions or eradicating it altogether. Those currently without a retirement fund, whether they plan to eventually have one or not are much less likely to have a university degree compared to those with a fund, and their reported annual household income is more likely to be under $40,000. Being "financially excluded" is correlated with lower income and education levels. For some, being excluded is not by choice as they are simply trying to make day to day ends meet.

Being young also has a role; 18 to 34 year olds are least likely to have a retirement fund. Young adults are however thinking about it, perhaps making plans for when they have acquired more financial assets - half of those under 34 years old plan to eventually have one. In comparison, older adults with no funds are less likely to have plans for a retirement fund; they are the truly excluded group.

Which of the following best reflects your current situation? Please note that 'retirement fund' refers to all funds, whether in registered savings plans or not, that you expect to use in your retirement. This would also include funds you might get from selling real estate.

Being "financially excluded" in Canada applies to not just the individual but also impacts others. While this group (no retirement fund and do not plan have one) is more likely than others to live alone, most live with at least one other person.

A majority (63%) of these "excluded" households did not spend any time in the past year developing plans for their savings or investments, retirement, insurance, tax, children's education or estate. When asked about a list of assets ranging from cash savings, tax free savings, life insurance, pension savings, non-registered investments, to annuities and more, close to two in five (37%) do not have any. More than half of them (59%) report household financial asset of less than $25,000, or none at all. Those with no retirement funds but planning to have some are faring better in comparison.

In the past year, did you or other members of your household spend some time developing and/or refining your household strategies in the area of..? And just for quota purposes, does anyone in your household currently own any of the following assets? Again just for quota purposes, please indicate which one of the following categories best describes your household's total FINANCIAL ASSETS, including chequing or savings deposits, stocks, bonds, mutual funds or other types of investments and cash, inside or outside registered accounts, your home(s), other real estate investments or personal possessions?

The "financially excluded" feel the deficiency - when asked to assess the financial wellness of their households, they are more likely to say that they are finding it quite or very difficult (39% versus 10% from those with a fund).

How well off would you say your household is financially these days? Would you say you are...

All is not greener on the other side - Canadians with retirement funds feel less than satisfied with their plans. Less than half (46%) feel moderately or very confident that their plans will sufficienly provide for them once retired, while fewer (41%) feel ahead of their peers when it comes to retirement planning. A mere 28% think that what they have in place is better than what they had expected to accumulate by this time. Not surprisingly, increases in confidence and other measures are associated with higher household income (particularly those over $100,000) and number of financial assets currently owned. Interestingly, education does not play a big part.

Given the current status of your retirement fund, how confident are you that it will sufficiently provide for you once you are retired? Thinking of your retirement fund today, how would you say it compares to the retirement funds of your peers? Would you say the retirement fund you currently have in place is......

Methodology

The Ipsos Canada eNation online omnibus survey launches every business day. Each survey (wave of eNation) consists of a minimum of 1,000 completes with adults 18 years of age or older in Canada. The sample consists of individuals selected from the online segment of Ipsos' iSay/Ampario Panel, and is balanced to be representative of the general population based upon region, gender, age, and education data from Statistics Canada. The selected individuals receive a customized e-mail inviting them to participate.

Ipsos Canada eNation online omnibus survey results are tabulated by two standard demographic banners.

A. Gender, Age Education
B. Region, Income, Household Composition

eNation's standard data tabulations are provided in a weighted format. The data are weighted to give appropriate representation on various demographic factors, including: age, education, region, and gender. The 2011 Census figures available from Statistics Canada are used to determine the weighting targets for each demographic factor.