How important is a formal written retirement plan?
Over six in 10 (63%) of Canadians with household investable assets of at least $100,000 are somewhat (49%) or strongly (14%) confident in their retirement prospects, according to a recent report.
And while the confidence is high among those with such assets of between $100,000 and $249,000, the level of confidence only grows as the amount of assets increases, reports research, consulting and professional development firm LIMRA:
|
Household investable assets |
Somewhat confident in their retirement prospects |
Strongly confident in their retirement prospects |
|---|---|---|
|
$100,000 - $249,000 |
47% |
7% |
|
$250-000 - $499,000 |
45% |
16% |
|
$500,000 - $999,00 |
60% |
17% |
|
$1,000,000 or more |
46% |
35% |
A previous report from BMO found that working Canadians now believe they’ll need $1.7 million to retire.
Nearly seven in 10 (69%) workers say they are confident they are saving enough for retirement, according to LIMRA’s survey of over 1,500 Canadian investors.
That’s because – on top of savings options available through their employer – more than half of workers across income brackets are saving money not just with their employer:
|
Household income |
Percentage of workers with savings at the workplace |
Percentage of workers with savings |
|---|---|---|
|
Under $50,000 |
28% |
56% |
|
$50,00 - $74,999 |
43% |
61% |
|
$75,000 - $99,999 |
56% |
54% |
|
$100,000 - $149,999 |
63% |
48% |
|
$150,000 or more |
67% |
50% |
“The vast majority (91%) of Canadian workers are saving for retirement, either at their workplaces or elsewhere (or both),” says LIMRA. “As expected, saving at the workplace increases as household income increases. Higher-income workers are more likely to work at employers offering defined contribution (DC) plans, and they are in a better position to put aside money each paycheck, compared with lower-income workers.”
But retirement confidence should not be solely determined by wealth, notes the firm.
“Even investors with substantial savings need to do in-depth planning and skillfully deploy their assets to meet their lifestyle goals. A strong predictor of confidence is the presence of a plan to manage income, expenses, and assets throughout retirement.”
Having a formal written plan is also strongly linked to retirement confidence: While 86% of those with a formal written plan are “very” or “somewhat” confident that they are saving enough, less than 6 in 10 (58%) of those with no retirement plan express the same level of confidence, according to LIMRA.
“Plans for retirement must address longevity risk and consider both the likelihood and impact a very long retirement could have. While the majority of non-retired Canadian workers feel confident they will be able to live the lifestyle that they want in retirement, carriers and advisors should stress the importance of lifetime-guaranteed options and how a formal written plan can help them ensure they are able to live the retirement they hope for.”
Here’s how you can encourage retirement savings and make it a rewarding experience for your employees, according to ADP:
Many workers have previously planned to delay their retirement because they expect they will outlast their savings by 10 years, according to a previous RBC survey.
