Despite significant demographic and economic shifts coming in the next decade and century, a third of Canadians remain unprepared for their retirement, according to HSBC's fifth annual future of retirement report.
About 20% of Canadian respondents to the global survey said they had not done much retirement planning and were not confident about their retirement income. Fifteen per cent said they were very unprepared and haven't done any retirement planning.
Almost half of respondents, 48%, said they felt fairly well prepared, having done some retirement planning but were still not sure exactly what their retirement income would look like. Only 17% said they felt very well prepared and didn't need any financial advice.
When respondents were asked about their level of understanding of their finances, only a third said they understood their long-term finances very well. Seventeen per cent said they had little to no understanding of their finances.
The report suggests Canadians are not taking advantage of the financial advice available to them, which is creating a gap in retirement preparedness. Even though they believed that the current recession could affect them for years, about 44% of survey respondents said they had never accessed any general financial education and a third have never used any form of professional financial advice.
About 29% of respondents said the recession would affect them for at least one to two years; a third said it will affect them for two or more years.
The recession appears to be forcing Canadians to focus on their short-term finances at the expense of their retirement. About 12% of Canadians have either cut back or reduced their savings into a pension, and rather than save more, about 17% said they have decided to delay retirement.
The report suggests Canadians of all working ages should be doing more to prepare for their retirement given the significant demographic shifts happening in Canada. According to UN population forecasts, the number of dependent adults in Canada will surpass the number of dependent children for the first time in the next five to seven years.
Also in the next 40 years, the proportion of the population 50 and higher will skyrocket, as Gen-Xers and Gen-Ys enter middle age, posing significant retirement issues for governments, companies and individuals.