More than half of Canadians aren't saving enough money for retirement: survey

People are seen in the Ottawa neighbourhood of Westboro on Sunday, July 24, 2022. THE CANADIAN PRESS/Spencer Colby

A new survey from tax preparation firm H&R Block Canada found that more than half of Canadians feel they are behind on retirement savings.

About half of Canadians polled (52 per cent) say they're unprepared for retirement because they don’t have enough money left at the end of the month for savings, and that they are planning on working part-time when they do retire, according to the survey.

“Not so long ago, the traditional vision of retirement was that at around 65 years old, Canadians ‘hung up their hats’ and celebrated the end of full-time employment,” H&R Block Canada president Peter Bruno said in a news release earlier this month. “What we’re seeing now is that the vision for retirement has evolved dramatically – fuelled by shifts in tax-friendly savings plan options, evolving workforce realities, the gig economy, and the prevailing economic environment.”

Fifty per cent of Canadians surveyed said they plan to have a “gig job” when they retire to bring in some income, and 36 per cent of respondents between the ages of 18 and 54 believe they won’t ever retire.

But some respondents were more optimistic, with 44 per cent saying they anticipate retiring earlier than the current average retirement age, which according to Statistics Canada is 64 years and six months.

And 46 per cent said they feel good about their retirement strategies, despite the current economic uncertainty.

When it comes to tax-friendly saving plans, including RRSPs and TFSAs, 56 per cent of Canadians report having an RRSP, while six per cent said they will set one up in the future. Fifty-five per cent said they need to better understand tax-friendly retirement savings options.

The proportion is lower, at 54 per cent, for those Canadians who have a TFSA. Six per cent plan to establish one at some point.

According to the survey, 37 per cent of Canadians said they have an employer-sponsored registered pension plan and 19 per cent rely on government-assisted retirement plans.

However, 65 per cent respondents indicated they’ll likely put less into their TFSA or RRSP this year, given the increased cost of living. Fewer people (32 per cent) feel like they put aside enough money monthly for their retirement.

“There is no one-size-fits-all retirement plan or strategy for Canadians, but regardless of your personal situation, having a good understanding of your options and how tax-friendly savings plans work is key,” said Bruno. “When it comes to tax filing time, it’s also important you understand any changes that could impact how to maximize your tax return and minimize your taxable income.”

These are the key changes of this tax filing season relating to retirement saving plans, according to H&R Block Canada:

• The RRSP limit for tax year increased to $30,780 and Canadians can contribute up to 18 per cent of their earned income;
• The TFSA contribution limit increased to $6,500;
• Canadians 65 and older whose taxable income was over $81,761 will need to repay some of their OAS, however, if the taxable income was over $134,626, they won’t have received any OAS payments;
• As of July 2022, seniors 75+ receive an automatic 10 per cent increase as part of the CRA’s new affordability plan;
• Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) increased by 2.7 per cent; and
• Self-employed Canadians must account for both the employer and employee contributions, so for this year, the maximum contribution for CPP is $6,999.60, and for QPP, it is $7,552.20.

Reporting for this story was paid for through The Afghan Journalists in Residence Project funded by Meta.