Minding the gap: Savings shortfall concerns Canadians as they look to their financial future – RBC Poll
Saturday, February 29, 2020
As a majority of Canadians (74%) continue to worry about their savings and how to balance immediate financial priorities against long-term needs, they are increasingly struggling to bridge a savings gap. More than half (53%) are now taking a “whenever I can” approach – the highest level in five years – rather than regularly setting aside savings, according to the annual RBC Financial Independence in Retirement Poll.
The poll found that, while over half of Canadians cite saving for retirement (56%) and a rainy day (53%) as their top financial priorities, what they manage to save for either is falling well short of their intentions. In fact, less than half of poll respondents who identified these two priorities actually put any savings toward them over the past year, with only 46% contributing to a rainy day fund and 43% putting money aside for retirement.
Concerns about not meeting their retirement savings goals are particularly weighing on the minds of those who are closest to retiring – Boomers aged 55+ – with four-in-ten (40%) fretting that they haven’t saved enough money for their retirement years. Boomers are also worrying about the impact inflation (40%) and any weakening of the markets (36%) could have on the value of their savings and investments.
Yet amidst these concerns, almost half (46%) of those aged 55+ do not have a financial plan in place, which could help them save and invest for their retirement years.
“It’s easy to connect the dots: many who aren’t saving enough don’t yet have a financial plan,” explains Stuart Gray, Director – Financial Planning Centre of Expertise, RBC. “The most important first step is to understand what your current finances will allow you to achieve. From there, a financial advisor can help you develop a plan to close any gaps and ease your concerns.”
When Canadians with a financial plan (49%) were asked how they felt about their financial future, responses were quite positive, stating they felt organized (43%), optimistic (38%), confident (35%) and reassured (33%). Resources such as RBC’s MyAdvisor make it easy to begin building a personalized plan, Gray adds.
“This is a great example of how less is more. We start by having a simple 20-minute conversation with you, which can be by phone, or in person at one of our branches, or even by live video if you prefer – whichever way you find most convenient. Through this, we help you begin to explore your options,” says Gray. “You’ll see right away that it’s never too late to begin making your money work for you and it can be easier than you may think.”
For the second consecutive year, the poll found that more Canadians own TFSAs (60%) than RRSPs (49%) and, if Canadians could only contribute to one, TFSAs continue to be preferred over RRSPs by a 2:1 margin (50% vs. 25%). For Canadians wanting to grow their savings, the big advantage of both TFSAs and RRSPs: the impact of compounding when financial contributions to TFSAs and RRSPs are invested.
“We explain this as gaining interest not only on your original investment, but also interest on your interest, which helps your earnings generate even more earnings,” adds Gray. “That’s a win for anyone who invests inside their TFSAs and RRSPs.”
More information about getting started on a plan and how TFSAs and RRSPs can help build out savings and investments can be found at www.rbcfinancialplanning.com.
RBC 2020 FINANCIAL INDEPENDENCE IN RETIREMENT POLL
National & Regional Comparisons
RESPONSES |
CAN |
BC |
AB |
SK/ |
ON |
QC |
AC |
|
Worried about balancing immediate priorities vs. long-term needs |
74% |
71% |
71% |
74% |
74% |
78% |
72% |
|
Save ‘whenever I can’ |
53% |
57% |
47% |
54% |
57% |
47% |
47% |
|
Top financial priority: Saving for retirement… |
56% |
57% |
60% |
62% |
54% |
51% |
61% |
|
…putting money toward saving for retirement |
43% |
42% |
43% |
48% |
43% |
42% |
41% |
|
Top financial priority: Rainy day fund… |
53% |
60% |
46% |
53% |
54% |
51% |
56% |
|
…putting money toward rainy day fund |
46% |
53% |
43% |
43% |
51% |
36% |
46% |
|
Top financial priority: Paying down debt… |
40% |
40% |
38% |
42% |
41% |
38% |
38% |
|
…putting money toward debt |
42% |
40% |
42% |
43% |
44% |
38% |
43% |
|
Don’t have a financial plan |
51% |
47% |
50% |
45% |
49% |
56% |
54% |
|
Have a TFSA |
60% |
63% |
62% |
65% |
61% |
59% |
45% |
|
Have an RRSP |
49% |
50% |
49% |
50% |
49% |
53% |
37% |
|
Prefer TFSA to RRSP |
50% |
53% |
50% |
50% |
49% |
51% |
49% |
RBC 2020 FINANCIAL INDEPENDENCE IN RETIREMENT POLL
Age Group & Gender Comparisons
RESPONSES |
ALL |
18-34 |
35-54 |
55+ |
Men |
Women |
|
Worried about balancing immediate priorities vs. long-term needs |
74% |
70% |
78% |
81% |
82% |
62% |
|
Save ‘whenever I can’ |
53% |
52% |
53% |
50% |
52% |
54% |
|
Top financial priority: Saving for retirement… |
56% |
59% |
52% |
44% |
63% |
57% |
|
…putting money toward saving for retirement |
43% |
47% |
39% |
36% |
49% |
42% |
|
Top financial priority: Rainy day fund… |
53% |
54% |
53% |
48% |
49% |
61% |
|
…putting money toward rainy day fund |
46% |
45% |
47% |
50% |
40% |
48% |
|
Top financial priority: Paying down debt… |
40% |
37% |
43% |
39% |
47% |
34% |
|
…putting money toward debt |
42% |
38% |
45% |
45% |
50% |
32% |
|
Worried about not saving enough for retirement |
53% |
49% |
56% |
59% |
63% |
40% |
|
Worried about impact of inflation on value of savings |
38% |
39% |
37% |
36% |
37% |
40% |
|
Worried about impact on value of investments, if markets weaken |
34% |
33% |
34% |
32% |
32% |
36% |
|
Don’t have a financial plan |
51% |
47% |
54% |
48% |
59% |
46% |
|
Have a TFSA |
60% |
61% |
59% |
57% |
54% |
67% |
|
Have an RRSP |
49% |
51% |
48% |
40% |
59% |
48% |
|
Prefer TFSA to RRSP |
50% |
49% |
51% |
43% |
41% |
63% |
About the RBC 2020 Financial Independence in Retirement Poll
These are a selection of findings of the 30th annual RBC RRSP Poll, conducted by Ipsos from December 10 to 17, 2019 on behalf of RBC Financial Planning, through a national survey of 2,000 Canadians aged 18+ who completed their surveys online. Quota sampling and weighting are employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.2 percentage points had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
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