Rising inflation and interest rates are threatening to erode Canadians’ retirement security, particularly for those younger than 35, according to a report released by the Healthcare of Ontario Pension Plan.
The 2022 Canadian Retirement Survey, conducted by market research firm Abacus Data, polled more than 1,700 Canadian adults and found that they are increasingly worried about their financial future. The responses suggest the retirement security for younger Canadian workers is increasingly in jeopardy due to barriers to home ownership and saving capacity, which the survey report says are being worsened by deteriorating economic conditions.
The survey found that 55% said they were concerned about having enough in retirement, which is a six-percentage-point increase from last year’s survey. And 66% cited the day-to-day cost of living as a major concern, which was up 11 points from last year, while 62% cited “income keeping up with inflation” and 56% said “housing affordability” were weighing heavily on their minds.
“Retirement and savings concerns have been high every year we’ve done the Canadian Retirement Survey, and now they’re being exacerbated by rising interest rates and inflation,” Steven McCormick, senior vice president, plan operations at HOOPP, said in a statement. “Well over half of Canadians expect these factors to cause financial challenges and force them to retire later. At the same time, funding retirement through the sale of a home is becoming a less viable strategy for many individuals. It raises the question of whether Canada’s younger generations are headed for a perfect storm on retirement security.”
Although saving for retirement was cited by respondents as their second-highest priority, the survey found that many of them were having difficulty accomplishing that goal, as 32% said they have not yet saved anything for retirement, while 38% said they have saved nothing for retirement in the past year.
The survey also found that 45% of Canadian homeowners expect to rely on the sale of a home to provide for retirement funds, but the report notes that that is becoming increasingly risky in the current economic environment. In addition to housing affordability concerns, 58% of non-homeowners said they are worried about how rising interest rates will affect their ability to buy a home, and 58% of homeowners are worried about their ability to sell their home as they approach retirement.
“The general outlook for retirement security in Canada is darkening,” David Coletto, CEO of Abacus Data, said in a statement. “Seventy-five percent of all Canadians agree there is an emerging retirement crisis in Canada and 72% feel that saving for retirement is prohibitively expensive — both up seven points over last year. And if current trends continue, it will be tougher for younger generations.”
The Healthcare of Ontario Pension Plan serves more than 420,000 participants among over 620 employers within the province’s hospital and community-based healthcare sector.