Retirement Readiness: Canadians 50+ - Ontario Securities Commission [PDF]

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Sep 9, 2016 - In this study, the Investor Office of the OSC has engaged Innovative Research Group (INNOVATIVE) to generate new and deeper insights into.
Prepared by:

Innovative Research Group, Inc. Toronto • Vancouver www.innovativeresearch.ca

Retirement Readiness: Canadians 50+ Prepared for:

Investor Office Ontario Securities Commission 20 Queen Street West, 22nd floor Toronto, ON M5H 3S8

Full Report | September 9, 2016

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Research Approach Overview Understanding the knowledge, attitudes, and behaviour of Ontario investors is critical to the Investor Office of the Ontario Securities Commission (OSC) mission to educate and protect financial consumers. Over the years the OSC has, both independently and in cooperation with other Canadian securities regulators, commissioned research studies focused on investor literacy, attitudes, and behaviours. In this study, the Investor Office of the OSC has engaged Innovative Research Group (INNOVATIVE) to generate new and deeper insights into pre- and post-retirement planning among Canadians aged 50 and older.

Methodology This survey was conducted online among a representative sample of 1,471 Canadians (550 in Ontario), 50 years or older, between June 15th and 21st, 2016. The sample has been weighted by age, gender and region using the 2011 Statistics Canada Census data to reflect the actual demographic composition of the adult population 50+ residing in Canada. The survey was about 7 minutes in length and respondents were free to respond in either French or English. About a quarter (23%) of the total sample completed the survey in French. Since the online survey was not a random probability based sample, a margin of error cannot be calculated. The Marketing Research and Intelligence Association prohibits statements about margins of sampling error or population estimates with regard to most online panels. However, a random probability based sample of this size would have an estimated margin of error of ±2.6%, 19 times out of 20. The estimated margin of error would be larger within each sub-grouping of the sample. Note: Graphs may not always total 100% due to rounding values rather than any error in data. Sums are added before rounding numbers.

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Executive Summary Findings from a new survey commissioned by the Investor Office of the OSC reveal that over half of Canadians do not have a plan for retirement savings, reinforcing the key findings of a study conducted a year ago. •

Compared to their standard of living today, 4-in-10 (43%) pre-retirees, 50+, in Ontario believe they will be worse off in retirement; nationally, this number is 40%.



Nearly half (48%) of Ontario’s pre-retirees 50+ do not have a plan for retirement savings. This is slightly better than the 56% of pre-retirees 50+ nationally who indicate they do not have a plan.



Among those with a retirement savings plan, nearly a third (29%) of Ontarians feel they are behind in their plan, compared to 31% nationally.



Among Ontario pre-retirees 50+, 1-in-5 (17%) have not yet started to save money for retirement. Nationally, 22% of pre-retirees 50+ haven’t started to save for retirement.



3-in-10 (32%) pre-retirees Ontarians 50+ have no idea of how much money they will need to save to help fund their retirement. That rises to nearly 4-in-10 (38%) nationally.



In Ontario, more than 4-in-10 (43%) of pre-retirees say they are afraid of running out of money in retirement. The fear of running out of money is similar nationally (42%) among pre-retirees, but considerably higher among women (47%) compared to men (37%).

Pre-Retirement Those who completed this section of the survey are not yet retired. Questions in this section deal with events leading up to retirement and what respondents might expect in the future.

Retirement Savings Plan (Pre-retirement): A majority (56%) have no savings plan Q

Do you have a plan that describes how to save for retirement? [asked of those who have yet to retire; n=673

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Segmentation  Respondents who say “No Plan”:

Region Yes, have a formal written plan

10%

BC

50%

Alberta

47%

Prairies

55%

Ontario

48%

Quebec

75%

Atlantic Canada

Yes, have an informal plan

51%

Life Stages

35%

Not retired

96%

Not retired, plan in 10 yrs

No, don’t need a retirement savings plan

52%

Investment Type No savings; no pension

10%

94%

No savings; with pension Savings and pension

62% 35%

Savings; but no pension

No, I don’t have any plan

46%

54%

Age-Gender Male 50-64

47%

Male 65+

61%

Female 50-64

60%

Female 65+

71%

49% 62%

State of Retirement Plan (Pre-retirement): Among those with a plan, about 1-in-3 are behind Q

When you think of your retirement savings plan, would you say: [asked of those who have yet to retire and have a retirement plan; n=299]

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Segmentation  Respondents who say “Behind”:

Region

I am ahead of my plan

BC

31%

Alberta

27%

Prairies

5%

Ontario

42% 29%

Quebec

34%

Atlantic Canada

40%

Life Stages

61%

I am on track with my plan

Not retired Not retired, plan in 10 yrs

100% 31%

Investment Type

31%

I am behind in my plan

No savings; no pension

64%

No savings; with pension

62%

Savings and pension Savings; but no pension

24% 34%

Age-Gender Don’t know

3%

Male 50-64 Male 65+ Female 50-64 Female 65+

30% 21% 31% 51%

29% 33%

Age of Retirement Plan (Pre-retirement): Of those with a plan, nearly 4-in-10 started planning at 40+ Q

When did you first start to prepare your retirement savings plan? [asked of those who have yet to retire and have a retirement plan; n=299]

Segmentation  Respondents who say “Over Forty”:

Region BC Alberta

32% 43%

Prairies

24%

In my 20s, or younger

Ontario

49% 29%

Quebec

37%

Between 30 and 39

52%

Atlantic Canada

57%

Life Stages Not retired Not retired, plan in 10 yrs

38% Over forty 13%

50 or older

49% 38%

Investment Type

24%

Between 40 and 49

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No savings; no pension

65%

No savings; with pension Savings and pension Savings; but no pension

74% 30% 41%

Age-Gender Male 50-64

Don’t know

1%

Male 65+ Female 50-64 Female 65+

29% 55% 42% 75%

31% 45%

Funding Retirement (Pre-retirement): Nearly 4-in-10 have no idea of the amount required to fund their retirement Q

Do you know how much money you will need to save to pay for your retirement? [asked of those who have yet to retire; n=673]

Segmentation  Respondents who say “No idea”:

Region BC

Yes, have an accurate estimate of the amount needed

33%

Alberta

26%

Prairies

13%

45%

Ontario

32%

Quebec

53%

Atlantic Canada

40%

Life Stages Yes, have a rough idea of what is needed

49%

Not retired

78%

Not retired, plan in 10 yrs

34%

Investment Type No savings; no pension

77%

No savings; with pension

No, have no real idea

Savings and pension

38%

46% 24%

Savings; but no pension

32%

Age-Gender Male 50-64 Male 65+ Female 50-64 Female 65+

29% 25% 48% 34%

29% 46%

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How are you Saving? (Pre-retirement): 1-in-5 Canadians 50+ haven’t started saving for retirement Q

How are you saving for retirement?

[asked of those who have yet to retire; n=673; multiple mention, percentages will not total 100%]

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Segmentation  Respondents who say “Don’t Save”:

Region BC

17%

Alberta

Invest/save lump sums of money whenever I can

38%

Prairies Ontario

22% 11% 17%

Quebec

Have a company pension plan (either my own or my spouse’s)

36%

35%

Atlantic Canada

23%

Life Stages Not retired

Invest/save regularly by having money taken out of my account

31%

53%

Not retired, plan in 10 yrs

19%

Investment Type No savings; no pension No savings; with pension

Haven't saved money for retirement

22%

Savings and pension Savings; but no pension

68% 9% 1% 20%

Age-Gender Don’t know

6%

Male 50-64

18%

Male 65+

22%

Female 50-64

23%

Female 65+

41%

18% 26%

10 Family Inheritance (Pre-retirement): A quarter feel inheritance will be an important part of their retirement plan

Q

How important was receiving, or someday receiving a family inheritance to your retirement savings plan? [asked of those who have yet to retire; n=673

Segmentation 

Respondents who say “Important”(very & somewhat):

Region BC

Very important

10%

Alberta

25% Important

15%

Somewhat important

23%

Prairies

28% 16%

Ontario

25%

Quebec

23%

Atlantic Canada

32%

Life Stages

15%

Not very important

31% Not important

16%

Not important at all

Not retired

27%

Not retired, plan in 10 yrs

24%

Investment Type No savings; no pension

18%

No savings; with pension

19%

Savings and pension

I will not be receiving a family inheritance

39%

Savings; but no pension

6%

29%

Age-Gender Male 50-64

Don’t know

23%

Male 65+ Female 50-64 Female 65+

28% 20% 23% 18%

27% 23%

Standard of Living (Pre-retirement): 4-in-10 believe they will be worse off in retirement Q

Thinking about your standard of living when you retire, do you see your standard of living in retirement being better or worse than it is currently? [asked of those who have yet to retire; n=673]

Much better

Somewhat better

1%

9% Better

Segmentation  Respondents who say “Worse”:

Region BC

37%

Alberta

40%

Prairies

39%

Ontario

8%

11

43%

Quebec

36%

Atlantic Canada

39%

Life Stages Neither better nor worse

44%

Not retired Not retired, plan in 10 yrs

44% 40%

Investment Type

27%

Somewhat worse

13%

Much worse

Don’t know

7%

No savings; no pension

40% Worse off

No savings; with pension Savings and pension Savings; but no pension

45% 27% 37% 40%

Age-Gender Male 50-64

41%

Male 65+

40%

Female 50-64

38%

Female 65+

46%

41% 39%

Planning Stress (Pre-retirement): Majority (57%) stressed about retirement planning Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? [asked of those who have yet to retire; n=673]

Segmentation  Respondents who say “Stressed”:

Region BC

Very high

Alberta

8%

Prairies Ontario

57% Stressed

15%

High

12

51% 56% 50% 56%

Quebec

62%

Atlantic Canada

65%

Life Stages Not retired

34%

Moderate

Not retired, plan in 10 yrs

47% 58%

Investment Type No savings; no pension

27%

Low

12%

None

40% Not Stressed

No savings; with pension Savings and pension Savings; but no pension

3%

75% 52% 58%

Age-Gender Male 50-64

Don’t know

58%

Male 65+ Female 50-64 Female 65+

56% 45% 58% 63%

55% 59%

Reaching Savings Goals (Pre-retirement): Over a quarter of those without savings don’t have a back-up plan Q

If you don’t reach your savings goal by the time you want to retire, what are you most likely to do?

[asked of those who have yet to retire and either don’t have a plan or feel behind in savings plan; n=476]

50% would continue working in some capacity

Segmentation  Respondents who say “Don’t Know”:

Region BC

24%

18%

Alberta Prairies Ontario

26%

13% 8% 11%

Quebec

23%

13

Atlantic Canada

24% 7%

Life Stages

16% 11%

Not retired Not retired, plan in 10 yrs

59% 10%

Investment Type No savings; no pension No savings; with pension Savings and pension

Continue to Work part time Retire as work full time until I reach my planned and until I reach my goal make do with goal less

Other

Don't know

“Other” includes unable to work, continue to work (enjoy working), selling assets.

26% 4% 9%

Savings; but no pension

16%

Age-Gender Male 50-64

7%

Male 65+

7%

Female 50-64 Female 65+

7%

24% 15%

23%

Pre-Retirees’ Fears about Retirement Those who completed this section of the survey are not yet retired. Questions in this section deal with respondent concerns with their retirement.

Retirement Expectations: Plurality (42%) fear running out 15 of money in retirement; few will rely on children for support Q

Please indicate if you agree or disagree with the following statements: [asked of those who have yet to retire; n=673]

I am afraid of running out of money during my retirement.

Unless I take some risks with my investments, I will not have enough money to retire.

6%

I am relying on real estate prices to rise in order to fund my retirement.

5%

14%

7%

11%

If there was a significant decline in property values, I will likely need to postpone my retirement for several years. I will likely need some financial support from my children and/or other family members when I retire.

Strongly agree

Somewhat agree

Neither agree nor disagree

14%

Somewhat disagree

3%

9%

38%

3%

36%

22%

18%

15%

26%

20%

20%

19%

16%

18%

24%

17%

5% 7%

21%

26%

16%

55%

Strongly disagree

5%

6%

Don’t know

Running out of Money: 4-in-10 (42%) pre-retirees are afraid of running out of money; highest among women Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? I am afraid of running out of money during my retirement. [asked of those who have yet to retire; n=673]

Segmentation  Respondents who “Agree”:

Region BC

40%

Alberta

Agree: 42%

Disagree: 34%

16

50%

Prairies

40%

Ontario

43%

Quebec

38%

Atlantic Canada

43%

Life Stages

26% 16%

Not retired

21%

52%

Not retired, plan in 10 yrs

16%

19%

41%

Investment Type No savings; no pension

50%

No savings; with pension

3%

42%

Savings and pension

34%

Savings; but no pension

Strongly agree

Somewhat agree

Neither agree nor disagree

Somewhat disagree

Strongly disagree

Don’t know

44%

Age-Gender Male 50-64 Male 65+

38% 25%

Female 50-64

47%

Female 65+

47%

37% 47%

Investment Risk: Almost 1-in-4 feel they have to take risks to have enough money to retire Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? Unless I take some risks with my investments, I will not have enough money to retire. [asked of investors who have yet to retire; n=546]

Segmentation  Respondents who “Agree”:

Region BC

19%

Alberta

30%

Prairies

27%

Ontario

Agree: 23%

21%

Quebec

Disagree: 44%

17

Atlantic Canada

27% 16%

Life Stages

24% 17%

Not retired

26%

Not retired, plan in 10 yrs

18%

No savings; no pension

9%

No savings; with pension Savings and pension Savings; but no pension

Somewhat agree

Neither agree nor disagree

Somewhat disagree

24%

Investment Type

6% Strongly agree

19%

Strongly disagree

Don’t know

21% 14% 21% 27%

Age-Gender Male 50-64 Male 65+ Female 50-64 Female 65+

24% 17% 26% 14%

23% 24%

Relying on Real Estate: About 1-in-5 are relying on rising real estate; higher amongst those without a pension Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? I am relying on real estate prices to rise in order to fund my retirement. [asked of homeowners who have yet to retire; n=487]

Segmentation  Respondents who “Agree”:

Region BC Alberta Prairies

Agree: 19%

Disagree: 58%

Quebec

19%

Not retired, plan in 10 yrs

20%

No savings; no pension

3% Somewhat disagree

11% 19%

Strongly disagree

Don’t know

23%

No savings; with pension

13%

Savings and pension

12%

Savings; but no pension

Neither agree nor disagree

8%

Investment Type

5% Somewhat agree

17%

Life Stages

14%

Strongly agree

13% 22%

Not retired

20%

21%

Ontario Atlantic Canada

38%

18

22%

Age-Gender Male 50-64 Male 65+ Female 50-64 Female 65+

19% 15% 19% 25%

18% 20%

Decline in Property Values: About 1-in-5 would have to postpone retirement if property values declined Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? If there was a significant decline in property values, I will likely need to postpone my retirement for several years. [asked of homeowners who have yet to retire; n=487]

Segmentation  Respondents who “Agree”:

Region BC

18%

Ontario

19%

Atlantic Canada

36%

Strongly agree

Not retired Not retired, plan in 10 yrs

22%

21% 9% 19%

Investment Type No savings; no pension

11%

Somewhat agree

11%

Life Stages

Agree: 18%

7%

26%

Prairies Quebec

18%

17%

Alberta

Disagree: 58%

5% Neither agree nor disagree

Somewhat disagree

19

Strongly disagree

Don’t know

No savings; with pension

27% 6%

Savings and pension

16%

Savings; but no pension

18%

Age-Gender Male 50-64 Male 65+ Female 50-64 Female 65+

20% 10% 16% 22%

19% 17%

Support from Children: About 1-in-10 are relying on children for support; highest among those without savings Q

When thinking about retirement planning, what is your level of stress with regard to your current situation? I will likely need some financial support from my children and/or other family members when I retire. [asked of those who have yet to retire; n=673]

Agree: 11%

Disagree: 68%

55%

20

Segmentation  Respondents who “Agree”:

Region BC

10%

Alberta

13%

Prairies

14%

Ontario

11%

Quebec

11%

Atlantic Canada

11%

Life Stages Not retired Not retired, plan in 10 yrs

16% 11%

Investment Type No savings; no pension

15% 5%

14% 6%

7%

25%

No savings; with pension

9%

Savings and pension

6%

Savings; but no pension

9%

Age-Gender Strongly agree

Somewhat agree

Neither agree nor disagree

Somewhat disagree

Strongly disagree

Don’t know

Male 50-64 Male 65+

9% 4%

Female 50-64

14%

Female 65+

14%

8% 14%

Retirement This section of the survey deals with retirement and the preparation that retirees have made up to this point.

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Financial Planning (Retirees): Over one third (36%) have no

financial plan for retirement Q

Segmentation  Respondents who say “No Plan”:

Do you have a financial plan for your retirement? [asked of all retirees; n=798]

Region BC

29%

Alberta

29%

Prairies

25%

Ontario

30%

Quebec

Do not have a plan

52%

Atlantic Canada

36% 62%

Have a plan

39%

Life Stages Retired within 5 yrs

31%

Retired more than 5 yrs

39%

Investment Type No savings; no pension

89% 61%

No savings; with pension Savings and pension

23%

Savings; but no pension

38%

Age-Gender Male 50-64

33%

Male 65+

35%

Female 50-64 Note: ‘Don’t Know’ (2%) not shown

Female 65+

42% 35%

34% 37%

Age of Retirement Plan: Nearly half (48%) started planning for retirement at age 40+ Q

When did you first start to prepare your retirement savings plan? [asked of all retirees who have a financial plan; n=491]

Segmentation  Respondents who say “Over 40”:

Region BC

19%

In my 20s, or younger

Alberta

39%

Prairies

41%

Ontario

51%

Quebec

54%

Atlantic Canada

30%

Between 30 and 39

47%

37%

Life Stages Retired within 5 yrs

53%

Retired more than 5 yrs

26%

Between 40 and 49

22%

50 or older

44%

Investment Type 48% started planning after 40

No savings; no pension

53%

No savings; with pension

47%

Savings and pension

45%

Savings; but no pension

54%

Age-Gender Male 50-64

Don’t know

2%

Male 65+ Female 50-64 Female 65+

42% 49% 30% 57%

46% 50%

23

Age of Retirement Plan: Retirees much more likely to start saving later in life; most pre-retirees start under 39 years Q

When did you first start to prepare your retirement savings plan? [asked of all retirees (n=491) and pre-retirees (n=299) who have a financial plan]

In my 20s, or younger

19%

24%

Between 30 and 39

30% 24% 26%

Between 40 and 49 13%

50 or older

Don’t know

1% 2% Pre-Retirees

Retirees

22%

37%

24

Retirement Savings Profile (Retirees): 15% did not save at all for retirement Q

Aside from any pension plans you may have, how did you save for your retirement? [Select all that apply; asked of all retirees; n=798]

Segmentation  Respondents who say “Did not Save”:

Region BC

Invested/saved lump sums of money whenever I could

46%

Invested/saved regularly by having money taken out regularly from my account

38%

Inherited money from family

23%

Did not save money for retirement

15%

Alberta

5% 13%

Prairies

8%

Ontario

10%

Quebec

28%

Atlantic Canada

26%

Life Stages Retired within 5 yrs

14%

Retired more than 5 yrs

16%

Investment Type No savings; no pension

Sold principal residence / took out a reverse mortgage

Savings and pension Savings; but no pension

Other

9%

2%

53% 5% 11%

Age-Gender Male 50-64

Don’t know

75%

No savings; with pension

5%

25

Male 65+ Female 50-64 Female 65+

15% 11% 21% 16%

13% 17%

Standard of Living (Retirees): Majority (52%) feel their standard of living will stay the same in retirement Q

Thinking about your standard of living, is it better or worse than it was before retirement? [asked of all retirees; n=798]

Much better

Segmentation  Respondents who say “Worse”:

Region

4%

BC

24%

Alberta

22%

Prairies

33%

Ontario

24%

Quebec

Somewhat better

40%

Atlantic Canada

15%

25%

Life Stages Retired within 5 yrs Retired more than 5 yrs

Neither better nor worse

52%

33% 26%

Investment Type No savings; no pension

67%

No savings; with pension

Somewhat worse

Savings and pension

24% 29% Say worse

Much worse

26

5%

52% 19%

Savings; but no pension

31%

Age-Gender Male 50-64

24%

Male 65+

22%

Female 50-64

34%

Female 65+

34%

23% 34%

Standard of Living (Pre-retirement and post comparison): Pre-retirees much more pessimistic about standard of living after retirement Q

Thinking about your standard of living, is it better or worse than it was before retirement? [asked of all retirees (n=760) and pre-retirees (n=299)]

52% 44%

27%

15%

1%

4%

Much better

8%

24% 13% 5%

7% 0%

Somewhat better Neither better Somewhat worse Much worse nor worse Pre-Retirees Retirees

Don’t know

27

Income Ranking (Retirees): A pension is the most important source of income for most retirees Q

28

Thinking about the money you have to live on in an average month, from which of these categories do you receive the most amount of income per month? [asked of all retirees; n=798]

Largest Source Investment income Personal savings and selling of investments

Second Largest Source

10% 4%

A pension from an organization where you or your spouse worked

53%

CPP and Old Age Security *

25%

Third Largest Source

Investment income

11%

Investment income

22%

Personal savings and selling of investments

11%

Personal savings and selling of investments

19%

13%

A pension from an organization where you or your spouse worked

A pension from an organization where you or your spouse worked CPP and Old Age Security *

42%

CPP and Old Age Security *

Other government pensions, such as disability or veteran

4%

Other government pensions, such as disability or veteran

Support from family members

1%

Support from family members

Other sources of income

3%

Other sources of income

7%

Other sources of income

No source

0%

No secondary source of income

7%

No third source of income

Note: ‘Don’t know’ (21%) not shown.

*Read as “QPP and Old Age Security” in Quebec.

6% 2%

4% 13%

Other government pensions, such as disability or veteran

4%

Support from family members

2% 13% 23%

29

Income Ranking Cumulative Income Sources 80%

CPP and Old Age Security

(QPP in Quebec)

A pension from an organization where you or your spouse worked

69% 44%

Personal savings and selling of investments

34% 23%

Other sources of income

Support from family members

A pension from an organization where you or your spouse worked

63% 57%

CPP and Old Age Security

(QPP in Quebec)

Investment income

Other government pensions, such as disability or veteran

Weighted Importance of Income

14% 6%

25%

Investment income Personal savings and selling of investments Other sources of income Other government pensions, such as disability or veteran Support from family members

17% 12% 9% 4%

Note: rankings calculated by weighted averages (scale bound between 100% and 0%; where 100% would represent the most important source of retirement income)

Appendix Respondent Demographics and Asset Profile

31

Demographics: Respondent Profile Gender and Age = 47%

= 53%

19%

24%

18%

Male 65+

32% 24%

30%

29%

Male 50-64

Household Income

Female 50-64

13%

Female 65+