BMO Annual Retirement Study
John’s Take
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Fewer than half (44%) of Canadians are confident they will have enough money to retire as planned Majority (74 per cent) are concerned about how inflation and rising prices will affect their finances.
BMO’s 13th annual Retirement Study reveals Canadians are prioritizing retirement savings as both contributions and account holdings have increased from the previous year. The study found that Canadians believe they will need $1.7 million to retire, up 20 per cent from 2020 ($1.4 million). However, fewer than half (44 per cent) of Canadians are confident they will have enough money to retire as planned, a 10 percent decrease from 2020.
According to BMO Economics, Canadian CPI inflation hit a four-decade high of 8.1 per cent in the summer of 2022 but has fallen to 6.3 per cent as of December 2022 and is expected to decline to around 3 per cent by the end of the year. The sharp increase in 2022 exceeded wage gains, resulting in a significant loss of purchasing power for most families. BMO’s Retirement Study found that 74 per cent of Canadians are concerned about how current economic conditions, most notably inflation and rising prices, will affect their financial situation, and 59 per cent believe this will affect their confidence in meeting their retirement goals.
The average amount held in RRSPs nationally is $144,613, a two per cent increase from 2021 ($141,923). 43 per cent of Canadians have already contributed to their RRSPs for the 2022 tax year, and another 14 percent plan to contribute before the March 1, 2023 deadline.
| REGION | AVERAGE AMOUTS Held in RRSPs | AVERAGE RRSP Contributions |
|---|---|---|
| Atlantic | $127,814 | $8,115 |
| Quebec | $125,751 | $6,155 |
| Ontario | $162,913 | $7,435 |
| Prairies | $138,391 | $7,429 |
| Alberta | $157,405 | $7,054 |
| BC | $125,573 | $7,298 |
| National | $144,613 | $7,058 |
“While the anticipated headwinds in 2023 will understandably prompt concerns about how inflation and interest rates will affect our finances, Canadians remain resilient and are taking proactive measures to protect and invest in their retirement nest egg,” said Nicole Ow, Head, Retail Investments, BMO. “As Canadians continue to look to save for retirement, working with a professional advisor can help them understand the investment opportunities available and make progress towards achieving their financial goals with confidence.”
Painting a Retirement Portrait
The survey also provides insights into Canadians’ approaches to retirement planning, including:
- The Golden Age: Approximately a quarter (22 per cent) of Canadians plan to retire between the ages of 60 and 69, with an average age of 62.
- The Contribution Picture: Among the 60 per cent of Canadians with an RRSP, 68 percent of them contributed to the account to save for retirement. Moreover, in addition to saving for their own retirement, 15 percent of Canadians contribute to the account to save and leave an inheritance for their children.
- Financial Independence, Retire Early (FIRE): One fifth (20 percent) of Canadians are contributing to their RRSPs to achieve financial independence as early as possible and 15 percent are saving towards an unexpected early retirement. If they could retire early, one-in-five (21 percent) Canadians would like to retire in their 50s.
- Back to the Drawing Board:
- Among the 37 percent of Canadians who had experienced a major life event since March 2020, such as starting a family, moving homes or starting a new business, 20 percent of them had experienced a loss of income and 9 percent had to make a large payment.
- The majority of Canadians believe the state of the economy has affected their financial behaviors, including the amount they are saving (69 percent) and the money they are investing (60 percent).
- Protecting the Nest Egg from Headwinds: Among the 80 percent of Canadians who rely on professional financial advice, more than half (57 percent) believe receiving professional advice is important amid current market conditions and feel that their financial advisors are better equipped to help them reach their goals (53 per cent).
“Financial advisors are powerful resources who can help Canadians remain focused on their financial goals during disruptions, major life events and uncertainty. While it is a confusing and intimidating time for many, an advisor can help alleviate some of the financial pressures by helping Canadians create a personalized plan and stress test the strategies through different market conditions and situations to help them stay on track towards their immediate and long-term goals,” said Ms. Ow.
For more information on BMO’s investment plans, visit www.bmo.com/investing and book an appointment or visit a branch to speak to an investment professional today
For more information on BMO Registered Retirement Savings Plan Accounts and opening an account, please visit www.bmo.com/rrsp/
The BMO RRSP Survey was conducted by Pollara Strategic Insights via an online survey of 1,500 adult Canadians conducted between November 4th and 7th 2022. The margin of error for a probability sample of this size is ± 2.5%, 19 times out of 20.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $1.14 trillion as of October 31, 2022, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
