Updated on January 23, 2024
Explore the Full Report: Deloitte Reveals Why Most Canadians Aren’t Prepared for Retirement.
Most Canadians Are Not Ready for Retirement: Says Deloitte
In recent years, the cost of retirement has risen in Canada, posing challenges for many individuals. Deloitte Canada’s November 2024 report highlights that a considerable number of Canadians are facing difficulties in securing sufficient funds for their retirement.
The survey conducted by Deloitte Canada indicates that a majority of Canadians are not adequately prepared for retirement, necessitating adjustments to avoid the risk of exhausting their financial resources as they approach retirement age. The report suggests that, in order to enjoy a comfortable life throughout their retirement, a significant number of Canadians preparing for this phase will need to make substantial sacrifices.
To assess how well Canadians are prepared for retirement, the study delved into the financial records of 4,000 individuals between the ages of 55 and 64. If you’re interested in gaining further insights into Deloitte Canada’s report on the lack of retirement readiness among most Canadians, this post provides an in-depth exploration of the report, the reasons behind the assertion, and potential solutions.
Comprehensive Report Reveals Majority of Canadians Unprepared for Retirement
As per a study conducted by Deloitte Canada, 55% of households on the brink of retirement in Canada would have to make adjustments to their lifestyle to avoid financial strain during their later years. The situation becomes even more concerning when factoring in unexpected costs such as healthcare, long-term care, and occasional one-time bills, pushing the figure to over three-quarters (73%).
According to the survey findings, a mere 14% of individuals approaching retirement age are expected to enjoy a stress-free retirement, comfortably handling unexpected expenses. The majority of this group are homeowners with financial assets totaling at least $900,000.
In contrast, a smaller segment of the population, facing the risk of insufficient funds for retirement, possesses some savings but falls short of covering expenses beyond the average life expectancy, let alone into their nineties. Alternatively, their wealth is likely tied up in real estate, with multiple assets but limited available cash.
The nearly one million households in the lowest percentile are projected to heavily depend on government assistance, including the Canada Pension Plan, to sustain them throughout their retirement years.
Reasons Canadians Are Not Ready for Retirement
Understanding the reasons behind this lack of preparedness is crucial, and even more so is exploring actionable steps individuals can take to secure their financial future.
The research points to several factors contributing to the escalating retirement burden, including heightened investment responsibilities for employees, soaring retirement costs, a dearth of planning tools, and unforeseen expenses in the later stages of retirement. Additional contributing factors encompass inadequate savings, escalating living and healthcare expenses, and underestimation of the financial requirements for retirement.
To tackle the looming retirement challenges, Deloitte Canada pinpointed three key areas of focus. These encompass encouraging individuals to cultivate robust saving habits “as early as possible,” enhancing the accessibility of guidance as retirement approaches, and aiding retirees in effectively managing cash flow and navigating the challenges posed by rising prices.
Concluding Words
Despite the concerning findings from Deloitte’s survey, Canadians now have an opportunity to assert control over their financial future and ensure a more secure and comfortable retirement. To mitigate the risk of outliving their assets, Canadians should assess their retirement readiness and proactively take steps, as highlighted by the survey and research.
Thoughtful preparation, adaptability, and a commitment to staying informed about evolving financial conditions are essential for ensuring a secure retirement. It’s crucial to factor in healthcare expenses, address other health-related considerations, and evaluate whether you need to initiate savings or explore how insurance policies can support your care within your retirement savings plans.
We greatly appreciate your visit to our portal to read about Deloitte’s report on the unpreparedness of most Canadians for retirement. Please continue to frequent our portal for additional international news and updates.