One-third of Canadians can't afford basic expenses: survey

One-third of Canadians can't afford basic expenses: survey

The findings presented in this article are not a surprise but they are concerning.

Most people could probably stand to learn a few lessons from the book linked at the left - The Cheapskate Next Door. 

This is your brain undergoing cognitive dissonance

This is your brain undergoing cognitive dissonance

Factors in Equity Investing

The Psy-Fi Blog: The Language of Lucre

The Psy-Fi Blog: The Language of Lucre

Retirement taking a backseat to present: BMO

Why are Canadians dragging their feet when it comes to retirement planning?

BMO says the answer can be found inside their minds. Using behavioural finance research, the bank believes it has uncovered clues as to why Canadians are procrastinating the way they are.
A report from BMO Retirement entitled Retirement Planning: Can I Get Back To You On That? and based on a survey conducted by The Strategic Counsel reveals that Canadians are more mindful of their present financial circumstances rather than their future.

The concepts of "immediate gratification" and "paralysis of choice" have severely affected retirement planning in Canada.

Delving into the psychology behind the competing priorities, the report states that although 82% of respondents understood that saving early for retirement is important, more than 81% are more concerned with their present needs than their retirement.

Canadians are also overwhelmed with too much information and too many options involving retirement planning. This has resulted in frustration and paralysis when action is required.
Thirty-six percent of non-retirees said they are overwhelmed by too much information and this has been an obstacle to them moving forward with retirement saving plans.

"While it's often hard to act against our natural instincts, it's critically important that Canadians take an active role in planning for their future and start as early as possible," says Tina Di Vito, Head, BMO Retirement Institute. "Understanding the psychological barriers to effective retirement saving is the first step to overcoming them."

The report also points to other contributing factors that are delaying many retirement plans. Those who have children under the age of 18 are unlikely to see saving for retirement as an immediate priority, as post-secondary education may take precedence. It is also difficult for those with a heavy debt burden to focus on retirement. Lower income respondents are overwhelmed by the volume of information available.

For those who are interested in saving for their retirement, BMO suggests the following steps:
Save early

• Create a budget
• Set financial goals and monitor your progress
• Sign up for your company's pension plan
• Make full use of tax-favoured investment vehicles
• Set up an automatic savings program
• Seek out financial help

The report was based on a poll of 2,034 Canadians, 35 years of age or older and was conducted using The Strategic Counsel's web panel between May 26 and June 2, 2010.
(07/29/10)

Filed by John Powell, john.powell@advisor.rogers.com
Originally published on Advisor.ca

dshort.com: Secular Bull and Bear Markets

dshort.com: Secular Bull and Bear Markets

Fewer than half of Canadians planning for retirement: poll

From the Toronto Sun:

Fewer than half of Canadians approaching retirement age have an income strategy in place, and two thirds haven’t considered the possibility that they could outlive their savings, according to a report by the BMO Retirement Institute.

Only 48% of those polled are planning to, or already have, discussed retirement incomes and how to structure their investments, it said. While the majority believe that unpredictable factors, such as inflation or medical expenses, may affect their financial stability, only 48% have planned for such contingencies, it said.

“As Canada’s boomers draw closer to their retirement years, having a strategy to manage investment income throughout retirement should be a top priority,” said Tina Di Vito, head of BMO Retirement Institute. “Financial resources available through programs such as the Canada Pension Plan and other pension schemes likely won’t be enough to support the average retirement lifespan.”

Nearly all baby boomers will be eligible for retirement within the next 20 years, and concern is mounting that their savings will not cover basic living expenses. To tackle the problem, the government is carrying out a series of consultations on how to reform the country’s pension system.

BMO urges those in the 55 to 65 age group to take a close look at their investments to ensure they will provide enough income to support their desired lifestyle.

The survey of 1,542 adults between April 12 and 15 was carried out by Leger Marketing.