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%
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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%
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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%
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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%
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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+