Despite proven advantages of financial planning for retirement, the majority of Canadians don’t have a financial plan for their future, according to a recent HSBC survey.
The sixth edition of the Future of Retirement study, a global survey from HSBC, revealed that those who have a financial plan in place enjoy a clear ‘planning premium’ with hard financial benefits, yet 65% of Canadian respondents, way more than the global figure of 50%, lack a financial plan to reap in retirement.
Those who have planned, noted the study, have amassed nearly two-and-a-half times (245%) more money in their retirement plans compared to non-planners. Of the 17 countries surveyed, Canada ranked 14th, with 35% of respondents reporting having a strategy in place.
To put it in relative terms, Canada is behind Malaysia (84%), China (76%), India (76%) and Taiwan (60%). The only countries that scored lower than Canada were France (30%), Mexico (25%) and Argentina (25%).
“Canadians should be more aware of their long-term financial needs and implement a plan to address these needs, even if they are starting out with a limited amount of money,” said Margaret Willis, executive vice-president, retail banking and wealth management, with HSBC Bank Canada. “A small investment now can provide real peace of mind and a positive outlook on retirement later in life.”
Planners hold a much broader range of retirement and non-retirement assets than those who do not plan. Planners also enjoy a much more positive outlook towards later life as they stress less about coping with financial needs in retirement.
Alongside the planning benefit, the findings also show a clear advice advantage for those who seek professional financial advice. In general, advice-seekers report greater levels of financial wealth than non-advice seekers, the survey reported.
Despite the obvious advantages, Canada had one of the lowest percentages of respondents who indicated having a financial plan for their future. In terms of financial preparedness, or rather lack thereof, Canada is not alone.
There are major global shortfalls in retirement preparedness; overall 41% of respondents feel poorly prepared for retirement and two-thirds expressed a concern that they will not be able to cope financially in retirement.
The survey also uncovered a major East-West divide in retirement perceptions. The factors driving a positive mindset seem to be closely associated with benign economic conditions and growing wealth in the emerging markets where, even during the financial crisis and recent global economic downturn, there has been continued growth in GDP, fuelling rising household incomes and an increased ability to undertake a strong savings habit.
Where people are actively planning ahead, there are genuine benefits to be enjoyed, such as increased access to private pensions and savings products as well as a more positive outlook on retirement, it reported.