Talking about retirement planning on Valentine’s Day seems a bit like wearing a Savile Row bespoke, silk pocket square and all, to a beach party. But judging by BMO Financial Group’s second Annual Valentine’s Day Retirement Study, it may not be a bad idea.
The survey, which polled 926 Canadian adults who are currently in a relationship, focuses on communication between couples on retirement planning.
“We hear that communication is essential in a relationship—but that should include talking about finances and plans for retirement too,” said Tina Di Vito, head of the BMO Retirement Institute. “The sooner couples have a detailed retirement ‘talk’, the easier it will be for them to develop and implement a financial plan that will help them realize their ideal retirement lifestyle.”
According to the study, 69% of Canadian couples state they have had a discussion with their partner about retirement plans. However, the picture this creates in not quite accurate, for fewer than half haven’t got down to discussing the essentials.
On close examination, the study reveals that some key components of retirement planning were missing from the discussion, such as what their ideal retirement lifestyle will look like (47%), money needed to support this lifestyle (42%), at what age they plan to retire (46%), where they want to live in retirement (44%) and whether or not they will stay in the family home (36%).
Canadian couples also showed a lack of knowledge of how much their partner has saved for retirement, including how much they have in their Registered Retirement Savings Plan (RRSP).
The survey also found that fewer than one-third (27%) of Canadian couples take advantage of spousal RRSPs, with one-quarter (26%) have no clue as to what they are.
Spousal RRSPs, arguably one of the most overlooked financial planning strategies, are a tax-effective way to split taxable income with a spouse at retirement. It is an RRSP account into which a higher tax bracket spouse (the contributor) deposits funds, but which belongs to their lower-income spouse or common-law partner.
The contributor claims the income deduction on deposits, but withdrawals are taxed in the hands of the spouse.
Perhaps not surprisingly, far more men indicated that issues relating to Valentine’s Day are more stressful (30%) versus women (10%). But when it comes to matters related to retirement, the study found it is women (61%) who feel more distressed than men (51%).
Finally, and here’s where the results get really interesting, 20% of the participants say Valentine’s Day causes them more stress than retirement, while 56% think it’s the other way round.