Posthaste: Canadians putting off saving for retirement, but still plan to stop working at 60 (2024)

Canadians appear to be focusing less on saving for retirement and more on trying to make ends meet, though most still want to retire early.

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More than half of Canadian investors say they’re concentrating on getting their bills paid over saving for the future thanks to a higher cost of living, according to a recent survey from the Canadian Imperial Bank of Commerce.

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That’s leading many to look past traditional long-term savings vehicles, such as the registered retirement savings plan (RRSP), to the tax-free savings account (TFSA) instead. Indeed, 53 per cent of investors with both an RRSP and TFSA said they preferred putting their money into the latter so they could access their savings tax-free at any time. RRSPs, in contrast, may be locked-in, meaning withdrawals, which are taxable, can only be made at a future date.

CIBC also said one third of people with RRSPs don’t intend to make any contributions by this year’s Feb. 29 deadline.

The shift to a more conservative financial focus is also showing up in people’s investing strategies, and 42 per cent said they’re looking for predictable returns over outsized growth amid an uncertain economic environment.

“The preference for short-term liquidity and stable returns suggests many Canadians are focused on today and less so on long-term accumulation of wealth or retirement,” Carissa Lucreziana, a vice-president at CIBC, said in a news release.

Inflation, higher interest rates and concerns the economy may tip into a recession have left many Canadians anxious about their finances. Worriers are spending an average of 17.7 more hours fretting about money than they were last year, according to separate research from the Bank of Nova Scotia.

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But even amid those financial fears and a shift in where Canadians are parking savings, most still expect to retire at around age 60, CIBC said. That may turn out to be merely a dream for many.

More than half admit they either can’t afford to save for retirement or aren’t sure they’re saving enough. Another 57 per cent harbour fears they’ll run out of money in their old age, while higher inflation has forced one-third to push back their expected retirement date.

Lucreziana said Canadians need to take steps to balance their current financial situation with future goals. “Planning for both short and longer-term ambitions can help individuals move beyond their immediate needs and envision how they can live for today (and) save for the future, accumulating wealth over time to support their retirement years,” she said.

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United States consumer prices jumped at the start of the year, tempering hopes for a continued drop in inflation and likely delaying any U.S. Federal Reserve interest rate cuts.

The so-called core consumer price index, which excludes food and energy costs, increased 0.4 per cent from December, more than expected and the most in eight months, according to government figures out yesterday. From a year ago, it advanced 3.9 per cent, the same as the prior month.

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Economists favour the core gauge as a better indicator of underlying inflation than the overall CPI. That measure advanced 0.3 per cent from December and 3.1 per cent from a year ago.

The figures further reduce already-slim chances that Fed officials will start lowering interest rates soon, and any additional re-acceleration might reignite talks that they will resume hikes. Some policymakers have said they want to see a broader easing of price pressures before cutting rates. — Bloomberg

• A hearing takes place before the Competition Tribunal between the Commissioner of Competition vs. Cineplex Inc. in a deceptive marketing practices case.
• Minister of Labour and Minister for Seniors Seamus O’Regan Jr., Minister of Environment and Climate Change Steven Guilbeault, Minister of National Revenue Marie-Claude Bibeau, and Minister of Rural Economic Development and minister responsible for the Atlantic Canada Opportunities Agency Gudie Hutchings, will provide an update on affordability measures for Canadians.
• Bank of Canada deputy governor Royce Mendes will participate in a panel discussion about the cost of living, housing and monetary policy at Wilfrid Laurier University in Waterloo, Ont.
• Today’s data: Existing home sales, MLS home price index
• Earnings: Barrick Gold Corp., Manulife Financial Corp., Great-West Lifeco Inc., West Fraser Tiber Co. Ltd., Kinross Gold Corp., Cisco Inc., Sony Corp.

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Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at aholloway@postmedia.com with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here.

Today’s Posthaste was written byVictoria Wells, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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