November 20, 2008 - Canadians over forty are taking a more conservative approach to retirement planning due to the recent financial turmoil, according to the annual Desjardins Financial Security Rethink Retirement survey. According to the survey, Canadians are willing to make compromises to save for retirement and are being more selective about where they place their hard-earned retirement savings. This is in sharp contrast to previous survey results, which indicated that most Canadians were confident in their financial goals for retirement, regardless of market volatility.
Conducted between June and August 2008, the initial survey found that the majority of Canadians felt confident about their financial security and retirement plans. In October, after the recent market fluctuations, Desjardins conducted a follow-up poll. Results indicated that 42 per cent of Canadians over forty would postpone their retirement by an average of 5.9 years. This was particularly true for more women (50 per cent) than men (36 per cent).
"The recent market instability may be the wake-up call that Canadians needed to step up their retirement strategy," says Michael Aziz, vice-president, sales and business development, individual savings products, at Desjardins Financial Security. "As advisors, we try to paint an accurate picture of what they may face financially in 20 to 25 years when they are ready to retire. It's important to prepare investors for the unknown, especially how to cope with difficult market conditions."
The survey conducted between June and August asked Canadians what they would be willing to do to increase their retirement savings. They said they would:
- Postpone a major purchase or expense to avoid financing or using credit (83 per cent);
- Take less expensive vacations (77 per cent);
- Bring lunch from home rather than buying it or eating at a restaurant (69 per cent);
- Significantly reduce car use, and consequently gas consumption (68 per cent);
- Reduce spending on sports or cultural activities (62 per cent);
- Get rid of the household's second car (58 per cent); and
- Reduce spending on activities for children (35 per cent).
The survey in October asked questions to measure whether Canadians were becoming more cautious about their financial decisions. Canadians over forty said the following considerations would be very important to them when selecting savings and investment vehicles over the next year:
- Financial strength of their institution (47 per cent);
- Returns on the capital invested (40 per cent);
- Quality of advice received (39 per cent);
- Guarantee on the capital invested (48 per cent);
- More consideration to their personal and financial needs (49 per cent).
"Canadians over forty are not in a state of panic, but seem to be finally paying attention to what the financial services industry has been trying to get across for many years," says Aziz. "Yes, most Canadians will be able to retire one day, but they are going to have to plan and work towards that goal. And part of this work will include the careful selection of their financial institution."
For more information about the survey, please visit: www.rethinkretirement.ca.
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