Retirement is a long-awaited moment for many workers. Rest is always sought after many years of work. However, for residents of Canada, this can still cost a lot. According to a new survey by BMO, Canadians believe they need $1.7 million in savings for retirement, up 20% from 2020.
Understand the reason for distress
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The results reflect Canadians' concerns about current economic conditions. Inflation and higher prices are the worries, according to Caroline Dabu, head of wealth distribution and advisory services at BMO Financial Group. Canada's annual inflation rate reached a four-decade high of 8.1% in the summer of 2022 and has since dropped to 6.3% in December 2022.
Inflation is a general and persistent increase in the prices of goods and services in an economy. When inflation is high, the purchasing power of money decreases, which means consumers have to spend more to buy the same goods and services.
Thus, inflation can be caused by a number of factors, including increases in demand for goods and services, increases in production costs, increases in wages and prices of raw materials and imbalances in the labor market, for example.
Expectations are bad for the retirement period
According to the BMO survey, only 44% of Canadians are confident they will have enough money to retire as planned. “In the survey, we found that 53% of Canadians did not know how much money they would need for retirement,” Dabu said. The BMO survey also found that approximately 22% of Canadians plan to retire between the ages of 60 and 69, with an average age of 62.
Millennials and Gen Z are the most nervous about their ability to save and invest in the moment, according to the survey. However, all age groups said they are concerned about how current economic conditions will affect their financial situation.
The cited BMO survey was conducted November 4-7, 2022 by Pollara Strategic Insights via an online survey of 1,500 people. The poll's margin of error is plus or minus 2.5%.
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