A new survey suggests a “perfect storm” is brewing that could jeopardize the retirement security of many young Canadians, as housing affordability, rising borrowing rates and the skyrocketing cost of living impact their ability to save for their golden years.
Fifty-five per cent of respondents to the survey, conducted by Abacus Data for the Healthcare of Ontario Pension Plan (HOOPP), said they were concerned about having enough money in retirement. That represents an increase of six points from last year.
The survey, which was released Thursday, polled 1,716 Canadians between April 21 and 27.
Covering day-to-day expenses, having an income that keeps up with inflation and home prices were other top anxieties among respondents when it came to their retirement, the survey found.
“It raises the question of whether Canada’s younger generations are headed for a perfect storm on retirement security,” said Steven McCormick, the senior vice-president of plan operations at HOOPP, in a press release.
While the survey typically finds retirement and savings are always high on the worry list, McCormick said rising rates and inflation are exacerbating those concerns.
“Well over half of Canadians expect these factors to cause financial challenges and force them to retire later. At the same time, funding retirement through the sale of a home is becoming a less viable strategy for many individuals,” he said.
The current economic environment is a difficult one for many Canadians. Data released by Statistics Canada Wednesday showed consumer prices surged 7.7 per cent in May year-over-year — the fastest rate of inflation since 1983.
That has heaped pressure on the Bank of Canada to raise its key lending rate to get inflation under control. As a result, home prices across the country have started to decline; however, homebuyers are now also facing rising mortgage rates.
Nearly half of survey respondents (45 per cent) said they intended to rely on the sale of their home to fund their retirement. At the same time, 58 per cent of respondents who own a home said they were worried about their ability to sell the house as they approach retirement.
“Savings challenges are more acute for younger adults, but there is an agreement across generations that an important solution to the problem is better workplace retirement savings plans, and that everyone has a role to play on this front,” McCormick said.