One-fifth (21 per cent) of working age Canadians believe public pensions will no longer exist when they reach retirement, according to a new report by HSBC.
Its annual look at the future of retirement, which surveyed more than 18,000 people in 16 countries, found that in Canada, that view is more common among millennials (28 per cent) and generation X (23 per cent) than baby boomers (eight per cent). Overall, 62 per cent of respondents are concerned about declining public pensions, with baby boomers (66 per cent) expressing a greater concern than gen-Xers (64 per cent) and millennials (57 per cent).
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Some 62 per cent of Canadians are also concerned about the impact of economic uncertainty on their ability to save for retirement. More than half (52 per cent) say it will be more difficult to save for a comfortable retirement following the financial crisis of 2007/08, and 48 per cent question whether their employer pension plans will be able to pay out in full when they retire.
The rising cost of health care is another important issue for Canadians, according to the survey. Three-quarters (74 per cent) of working-age Canadians believe retirees will have to spend more on health-care costs in the future and 61 per cent are concerned about being able to fund their own health care in retirement. A third (33 per cent) are worried about the availability and affordability of health care, compared to the global average of 25 per cent.
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According to the report, the changes in the retirement landscape are forcing people to adjust their expectations for retirement. Only 29 per cent of Canadians think they’ll be financially comfortable in retirement, based on how their retirement savings are progressing. Another 29 per cent haven’t started saving for retirement.
As a result, 55 per cent of respondents believe they’ll continue working to some extent in retirement. Two-thirds (66 per cent) say they’d be willing to defer their retirement for two years or more to have a better retirement outcome. And 44 per cent would work for longer or get a second job to sustain their retirement savings.
When it comes to retirement readiness by generation, just five per cent of respondents think millennials are in the best position for a comfortable retirement, compared to 49 per cent who think baby boomers are. And some 41 per cent of respondents believe employer pension plans may go bust or be unable to pay out for millennials.
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On average, millennials started saving for retirement at age 25, according to the report. However, 38 per cent haven’t yet starting saving, compared to 23 per cent of gen-Xers and 12 per cent of baby boomers. There’s little difference across the generations in terms of aversion to financial risk, with 22 per cent of millennial respondents willing to make risky investments to ensure their financial stability, compared to 23 per cent of gen-Xers and 14 per cent of baby boomers.
The report also found technology is changing the way people save for retirement. Among working-age Canadians, 23 per cent have researched retirement savings options on the Internet; 22 per cent have put money into an online savings account; 15 per cent have used an online calculator; and eight per cent have used a retirement planning app.