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Minding the gap: Savings shortfall concerns Canadians as they look to their financial future - RBC Poll

26/02/2020 10:30am

PR Newswire (Canada)


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  • While majority cite saving for retirement and a rainy day as top priorities, less than half are setting money aside for either
  • Boomers worry about impact of inflation on retirement savings
  • More Canadians holding TFSAs than RRSPs

TORONTO, Feb. 26, 2020 /CNW/ - As a majority of Canadians (74%) continue to worry about their savings and how to balance immediate financial priorities against long-term needs, they are increasingly struggling to bridge a savings gap. More than half (53%) are now taking a "whenever I can" approach – the highest level in five years – rather than regularly setting aside savings, according to the annual RBC Financial Independence in Retirement Poll.

RBC Royal Bank (CNW Group/RBC Royal Bank)

The poll found that, while over half of Canadians cite saving for retirement (56%) and a rainy day (53%) as their top financial priorities, what they manage to save for either is falling well short of their intentions. In fact, less than half of poll respondents who identified these two priorities actually put any savings toward them over the past year, with only 46% contributing to a rainy day fund and 43% putting money aside for retirement.

Concerns about not meeting their retirement savings goals are particularly weighing on the minds of those who are closest to retiring – Boomers aged 55+ – with four-in-ten (40%) fretting that they haven't saved enough money for their retirement years. Boomers are also worrying about the impact inflation (40%) and any weakening of the markets (36%) could have on the value of their savings and investments.

Yet amidst these concerns, almost half (46%) of those aged 55+ do not have a financial plan in place, which could help them save and invest for their retirement years.

"It's easy to connect the dots: many who aren't saving enough don't yet have a financial plan," explains Stuart Gray, Director – Financial Planning Centre of Expertise, RBC. "The most important first step is to understand what your current finances will allow you to achieve. From there, a financial advisor can help you develop a plan to close any gaps and ease your concerns."

When Canadians with a financial plan (49%) were asked how they felt about their financial future, responses were quite positive, stating they felt organized (43%), optimistic (38%), confident (35%) and reassured (33%). Resources such as RBC's MyAdvisor make it easy to begin building a personalized plan, Gray adds.

"This is a great example of how less is more. We start by having a simple 20-minute conversation with you, which can be by phone, or in person at one of our branches, or even by live video if you prefer – whichever way you find most convenient. Through this, we help you begin to explore your options," says Gray. "You'll see right away that it's never too late to begin making your money work for you and it can be easier than you may think."

For the second consecutive year, the poll found that more Canadians own TFSAs (60%) than RRSPs (49%) and, if Canadians could only contribute to one, TFSAs continue to be preferred over RRSPs by a 2:1 margin (50% vs. 25%). For Canadians wanting to grow their savings, the big advantage of both TFSAs and RRSPs: the impact of compounding when financial contributions to TFSAs and RRSPs are invested.

"We explain this as gaining interest not only on your original investment, but also interest on your interest, which helps your earnings generate even more earnings," adds Gray. "That's a win for anyone who invests inside their TFSAs and RRSPs."

More information about getting started on a plan and how TFSAs and RRSPs can help build out savings and investments can be found at www.rbcfinancialplanning.com.

RBC 2020 FINANCIAL INDEPENDENCE IN RETIREMENT POLL

National & Regional Comparisons

RESPONSES

CAN

BC

AB

 

SK/
MB

ON

QC

AC

Worried about balancing
immediate priorities vs.
long-term needs

74%

71%

71%

74%

74%

78%

72%

Save 'whenever I can'

53%

57%

47%

54%

57%

47%

47%

Top financial priority:
Saving for retirement…

56%

57%

60%

62%

54%

51%

61%

…putting money toward
saving for retirement

43%

42%

43%

48%

43%

42%

41%

Top financial priority:
Rainy day fund…

53%

60%

46%

53%

54%

51%

56%

…putting money toward
rainy day fund

46%

53%

43%

43%

51%

36%

46%

Top financial priority:
Paying down debt…

40%

40%

38%

42%

41%

38%

38%

…putting money toward
debt

42%

40%

42%

43%

44%

38%

43%

Don't have a financial
plan

51%

47%

50%

45%

49%

56%

54%

Have a TFSA

60%

63%

62%

65%

61%

59%

45%

Have an RRSP

49%

50%

49%

50%

49%

53%

37%

Prefer TFSA to RRSP

50%

53%

50%

50%

49%

51%

49%

 

RBC 2020 FINANCIAL INDEPENDENCE IN RETIREMENT POLL

Age Group & Gender Comparisons

RESPONSES

ALL

18-34

35-54

55+

Men

Women

Worried about balancing
immediate priorities vs.
long-term needs

74%

70%

78%

81%

82%

62%

Save 'whenever I can'

53%

52%

53%

50%

52%

54%

Top financial priority:
Saving for retirement…

56%

59%

52%

44%

63%

57%

…putting money toward
saving for retirement

43%

47%

39%

36%

49%

42%

Top financial priority:
Rainy day fund…

53%

54%

53%

48%

49%

61%

…putting money toward
rainy day fund

46%

45%

47%

50%

40%

48%

Top financial priority:
Paying down debt…

40%

37%

43%

39%

47%

34%

…putting money toward
debt

42%

38%

45%

45%

50%

32%

Worried about not saving
enough for retirement

53%

49%

56%

59%

63%

40%

Worried about impact of
inflation on value of
savings

38%

39%

37%

36%

37%

40%

Worried about impact on
value of investments, if
markets weaken

34%

33%

34%

32%

32%

36%

Don't have a financial plan

51%

47%

54%

48%

59%

46%

Have a TFSA

60%

61%

59%

57%

54%

67%

Have an RRSP

49%

51%

48%

40%

59%

48%

Prefer TFSA to RRSP

50%

49%

51%

43%

41%

63%

 

About the RBC 2020 Financial Independence in Retirement Poll
These are a selection of findings of the 30th annual RBC RRSP Poll, conducted by Ipsos from December 10 to 17, 2019 on behalf of RBC Financial Planning, through a national survey of 2,000 Canadians aged 18+ who completed their surveys online. Quota sampling and weighting are employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.2 percentage points had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

About RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 85,000+ employees who bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada's biggest bank, and one of the largest in the world based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our 17 million clients in Canada, the U.S. and 34 other countries. Learn more at rbc.com.

We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/community-social-impact.

About RBC's financial planning advice and unique MyAdvisor service
RBC Financial Planning offers planning advice and resources and the RBC Retirement Planning website can help you plan for 30 years or more in retirement. This financial advice is complemented by a free service unique to RBC – MyAdvisor – which connects clients to advisors and financial planners for face-to-face, real-time video or phone meetings, where together they can view and adjust a client's comprehensive financial picture. In addition, Discover & Learn offers free online advice, resources and tools for Canadians who want to get more from their day-to-day banking, protect what's important, save and invest, borrow with confidence or take care of their businesses.

SOURCE RBC Royal Bank

Copyright 2020 Canada NewsWire

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