A recent study by Scotiabank shows the number of Canadians anticipating a working retirement is on the rise while the amount of savings they expect to need is declining.
TORONTO—Of those Canadians who plan to retire, more than two-thirds plan to work during retirement, according to a recent Harris/Decima study commissioned by Scotiabank.
Most respondents planned to continue work primarily to remain mentally (72 per cent) and socially (57 per cent) active. However, 38 per cent expect to work after they officially retire out of financial necessity.
The study found that 56 per cent of Canadians think they will need less than $1 million to fund their retirement, half of whom believe they will need less than $300,000. More than one-quarter of Canadians think they will need between $1 million and $2 million and 16 per cent believe they will need more than $2 million to fund their ideal retirement.
“Being mentally and socially active is important at any age,” said Gillian Riley, senior vice-president and head of Retail Payments, Deposits and Lending at Scotiabank. “While there’s no magic number that Canadians should be aiming for when saving for retirement, it’s important that Canadians are realistic about how they plan to spend their retirement and how much it will cost,” said Ms. Riley. “Whether it be $250,000 or $1,000,000, it can be daunting to think about needing such a large sum of money, so it is equally important for Canadians to consider how much they can afford to put away for retirement and understand what that amount will mean for them down the road.”
When it comes to how they plan to spend their retirement, 86 per cent plan to travel and 72 per cent aim to spend time with family and friends.
Other retirement plans include taking up a hobby (50 per cent) and going back to school (24 per cent).
As for saving for retirement, three-quarters (78 per cent) of those expecting to retire are currently putting money away for their future and they have been doing so for an average of 15 years. About half of Canadians who plan to retire report saving less than $20,000 over the past five years.
While the bulk of money for retirement will come from RRSP contributions and savings (78 per cent and 68 per cent respectively), many Canadians indicated their retirement would also be funded by money from the government (63 per cent), their work pension (55 per cent) or inheritance (27 per cent). A small number of Canadians expect to have retirement money come from the lottery (five per cent) or their kids (four per cent).