Despite the increased cost of living and the impact of market volatility, Canadians are maintaining an optimistic outlook towards retirement, buoyed by the existence of a financial plan. Fidelity Investments Canada ULC (Fidelity) yesterday unveiled the 2023 Fidelity Retirement Report, a vital resource for financial advisors and investors aiming to understand current retirement trends and strategies to better equip for and live during retirement.
The 18th iteration of this report offers valuable insights into long-standing and current influencing factors, including inflation, housing, interest rates, and market volatility, and their effects on retirement planning. The report validates the significance of a financial plan and professional advice as an all-weather solution, particularly under the current stressful market conditions, for Canadians nearing or already in retirement.
Key insights:
- There is a decreasing optimism among Canadians about retirement. In 2018, 80% of pre-retirees and retirees had a positive outlook for retirement, but this percentage dropped to 73% in 2023, largely due to the increasing cost of living as the primary impediment to retirement.
- As the cost of living continues to rise, 42% of Canadians have reported saving less compared to the previous year.
- Half of Canadians are investing exclusively in safe assets, potentially reducing their retirement income over time. This is a 10-percentage point increase compared to the previous year.
- However, Canadians with a written financial plan have reported feeling considerably better prepared, both financially (91% vs 58%), emotionally (85% vs 69%), socially (84% vs 69%), and physically (88% vs 73%) compared to those without such a plan.
- While Canadians are saving for various priorities, immigrants are more likely to save in order to support family members.
- Among those with a written financial plan, 82% collaborated with a financial advisor to create the plan. 64% of pre-retirees who have an advisor have peace of mind that their financial goals are on track, compared to 34% without an advisor.
- Despite the apparent benefits, only 28% of Canadians have a written plan. Quebeckers, at 33%, are most likely to have a written plan and consequently have the most positive retirement outlook at 79%.
Michelle Munro, Fidelity Investments Canada ULC's Director of Tax and Retirement Research, emphasizes the importance of a financial plan, stating, "By implementing a financial plan for retirement, Canadians can instill a sense of hope amidst the continuous stream of negative news. Everyday expenses such as groceries, energy bills, and clothing are increasingly affected by inflation, thereby delaying Canadians' desired retirement plans."
Similarly, Peter Bowen, Vice President of Tax and Retirement Research at Fidelity, reiterated the recurring theme of the value in having a written financial plan. He said, "Yet, a majority of Canadians don't have one. Those who do typically work with a financial advisor, fostering healthier saving and investing habits overall."
For more information about the 2023 Fidelity Retirement Report, visit www.fidelity.ca/retirement.
About the 2023 Fidelity Retirement Report:
Fidelity's Retirement Report for 2023 is centered around the strategies and perspectives of Canadians either on the verge of retirement or already enjoying this phase of their lives. This study, commissioned by Fidelity Canada, was conducted from March 1st to March 13th, 2023, encompassing a total of 1,920 Canadian respondents (49% male and 51% female), with the median age being 62. The sample deliberately over-represented pre-retirees and retirees to facilitate nuanced regional and gender analyses. The results were then weighted to mirror the national distribution of those aged 45 and over. The total sample results hold a precision level of +/- 2.31 percentage points, 19 times out of 20.
The very first Fidelity Retirement Survey was carried out in 2005, and Fidelity has consistently offered valuable insights into the attitudes and behaviors of Canadian pre-retirees and retirees every year since. Three years ago, the World Health Organization announced COVID-19 as a pandemic, which was downgraded to no longer being a global health emergency in the spring of 2023. However, while one challenge has receded, others have arisen. This year's report delves deeply into the contemporary trends affecting Canadians - factors like market volatility, inflation, the housing crisis, and the future of the Canadian dollar - all of which are significant considerations for those planning or living their retirement.
Regardless of where you are on your retirement journey, the insights offered in the Fidelity Retirement Report can equip you with valuable knowledge to help you feel more confident as you traverse your retirement pathway. For many Canadians, retirement may represent more quality time with loved ones; for others, it could mean the liberty to globe-trot, learn a new language, master the guitar, cultivate a dream garden, or welcome additional pets into the family - this new chapter presents an array of exciting opportunities to relish life post years of dedication to your career.
