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Posthaste: More than half of Canadians think their retirement plans are in trouble Back to video

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Good morning.

Canada’s economic landscape is weighing on investors’ minds, with 55 per cent believing their retirement plans have been impacted by current economic conditions, according to a recent report by the Bank of Nova Scotia.

The Scotia Global Asset Management Investor Sentiment Survey, which interviewed 1,022 Canadians, found that 59 per cent of them are feeling negative about their investments, up from 33 per cent in the fall 2021 survey.

Investors’ top five perceived risks to their portfolios over the next couple of years were an economic recession (61 per cent), rising inflation (58 per cent), stock-market volatility (46 per cent), rising interest rates (40 per cent) and global geopolitical risk (37 per cent).

One reason for all the angst is that only 26 per cent have a written financial plan.

“These results indicate that investors have current concerns about meeting their retirement goals; however, regular meetings with financial advisers and having a written financial plan diminish those concerns,” Neal Kerr, head of Scotia Global Asset Management, said in a press release.

But there is also a stark contrast between how men and women feel about retirement.

A separate survey by the Bank of Montreal found that 52 per cent of women are confident about retiring at their target age compared to 68 per cent of men.

The BMO Real Financial Progress Index, which interviewed 3,401 Canadians, also showed that 73 per cent of women don’t have a financial plan in place to reach their goals compared to 64 per cent of men.

“As the cost of inflation and the financial impacts of the pandemic have significantly affected many women, it’s understandable that they are feeling the need to rebuild their savings and feeling less confident about retiring at the age they had planned,” Gayle Ramsay, head of everyday banking and customer growth at BMO, said in a press release.

In addition, 87 per cent of women reported having a fear of unknown expenses, and 63 per cent had anxiety about keeping up with their monthly bills.

“Financial planning and financial literacy are imperative when navigating finances to ensure customers are making real financial progress,” Ramsay said. “With most women reporting they have no financial plan in place, they can start to alleviate their anxiety and take control of their finances by evaluating their budgets, adjusting spending habits accordingly and committing to a savings and retirement plan.”

Overall, only 74 per cent of women said they feel in control of their finances compared to 84 per cent of men.

One reason is the financial literacy gender gap between men and women that stems from childhood upbringing.

The survey found a slight gap between how men and women are educated about personal finance from a young age: 61 per cent of women said they did not have conversations with family members about budgeting or financial planning compared to only 57 per cent of men.

The gender pay-gap is another contributor that impacts the amount of money women can save and invest for retirement. In Canada, women on average earn 89 cents for every dollar earned by men, according to Statistics Canada.

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The European Central Bank raised interest rates by 50 basis points on Thursday as promised, ignoring financial market chaos and calls by investors to dial back policy tightening at least until sentiment stabilizes. In line with its often-repeated guidance, the central bank for the 20 countries that share the euro lifted its deposit rate to three per cent, the highest level since late 2008, as inflation is seen overshooting its two per cent target through 2025. The ECB has raised interest rates by a combined 3.5 percentage points since July to fight a record surge in inflation, and more rate action is still likely as price growth is proving to be far more stubborn than once feared.  — Reuters

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Today’s Posthaste was written by Noella Ovid, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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