While Canadian workers feel their financial situation has improved in the last two years, half of those under the age of 50 are worried about their current and future financial state, according to a Towers Watson survey.
“There are multiple sources contributing to this financial anxiety. Among them is the lack of confidence in financial support from public benefits. Less than one-third of the survey respondents believe that Old Age Security and the Canada/Quebec Pension Plans will continue to provide the same level of benefits in the future as they do today, and more than 70% of respondents believe we will see diminished coverage under provincial health care benefits,” says Karen Burnett, a senior Towers Watson retirement consultant.
Workers also continue to struggle with the corporate cut-backs of the past five years. The survey shows 76% have endured cuts in salary increases and benefits, or have lived through significant organizational change. “Employers and employees alike have experienced a significant period of change and we are now living in a new reality,” says Burnett.
“While corporate profitability has improved and rising stock prices have boosted retirement accounts, slow economic growth and stagnant wages continue to weigh on public confidence and contribute to a continued fear about a retirement crisis in Canada.”
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The survey shows that Canadians are tackling their concerns about financial security head-on by deferring expenditures, paying down debt and living more modest lifestyles. They’re also saving more for retirement. In fact, close to two-thirds of survey respondents 40 or older rank saving for retirement as their number one priority.
But many are not saving enough. Three-quarters are saving below their ideal target and only half of the survey respondents believe they will be able to improve their financial prospects. For many, this means delayed retirement.
“The survey shows that many employees anticipate longer careers and will delay their retirement by 3 or more years,” says Dan Morrison, a leader of Towers Watson’s Defined Contribution consulting group. “It is no surprise that those planning to delay their retirement tend to save less. However, the profile of those delaying retirement also tends toward employees who are less healthy, more stressed and are less engaged. Increasingly, this reality will be a challenge that employers will need to address in order to maintain efficient workforce management and productivity.”