Canadians Look Forward to Retirement but Wrestle with Savings Concerns

TORONTO, Feb. 24, 2015 /CNW/ - Franklin Templeton Investments' 2015 Retirement Income Strategies and Expectations (RISE) survey found that 88 per cent of Canadians who haven't retired expressed concerns about paying expenses in retirement, with health care and lifestyle expenses most frequently cited. This concern appears to be well founded, as over one-third (39 per cent) of people who are 11 or more years into retirement said their overall expenses have increased since they retired, according to the January 2015 survey.  

"Even if you do save enough to retire at 65, it can be hard to gauge how expenses will rise over the next decades, especially with the moving targets of health care expenses and inflation," said Philip Bensen, senior vice president for Franklin Templeton Investments Corp. "This reinforces the importance of working with an investment advisor before and during retirement who can tailor a written retirement plan to your needs and goals, helping you prepare for the unknown."

Although a strong majority of Canadians (96 per cent) who are currently saving for retirement are looking forward to it, simply thinking about having enough money is causing people to worry. The 2015 RISE survey, which surveyed a total of 6,023 individuals throughout Canada, the US and the UK, found that more than two-thirds of Canadians (68 per cent) experience stress and anxiety when thinking about retirement savings and investments. That compares to 67 per cent of Americans and 60 per cent of UK respondents.

The role of stress and anxiety
Stress and anxiety levels are highest in the 35 to 54 age range, with roughly three-quarters of Canadian pre-retirees experiencing stress and anxiety when thinking about retirement savings and investments. While these levels certainly decrease as people head into retirement, 57 per cent of all retirees still experience stress and anxiety, most likely due to being fearful of or surprised by unexpected major expenses like health care.

For 38 per cent of Canadians aged 35 to 54, their top retirement concern is the fear of running out of money and roughly a quarter of this age group is worried about health and medical issues. Yet 44 per cent of all retirees are most concerned about health and medical issues, with this concern peaking among retirees who are 11 or more years into retirement at 49 per cent.

Retirees are also concerned about inflation and low interest rates as it is their second most cited concern (15 per cent), whereas only five per cent of pre-retirees mentioned it.

"In their 30s, 40s and 50s, the day-to-day expenses of life, such as paying for a house, a car and children, often make it challenging to set aside enough for retirement," said Bensen. "The idea of catching up can be stressful and anxiety inducing, stopping people from taking even simple steps. An advisor can help with proper planning during the pre-retirement years, as well as breaking through this inertia, before retirement is on the horizon. Once retirement occurs, an advisor can help ensure their savings grow and last long enough, even if expenses increase due to health care and other costs."

Some of the best advice for retirement saving comes from retirees themselves, with over three-quarters (78 per cent) of Canadians and Americans recommending "saving early, saving often and saving consistently" to people who are not retired.

When Canadian pre-retirees were asked what they would ask those who are already retired, respondents had a variety of questions, including "when they should start saving" and "how much money should they save each year". Although three-quarters of pre-retirees (73 per cent) are stressed and anxious when thinking about retirement savings and investments, 37 per cent of Canadian pre-retirees have not started saving for retirement, and even more surprising, a quarter of pre-retirees aged 45 to 64 have not even started saving. "The worst thing you can do is not act when you're feeling stressed about retirement," added Bensen.

The survey also found differences among Canadian pre-retirees:
- 70 per cent of Canadian men have started saving versus 58 per cent of women.
- Three-quarters of married Canadians have started saving versus only about half (52 per cent) of single people or those living with a partner.
- More than two in five Atlantic (44 per cent) and Quebec (43 per cent) residents have not started saving for retirement. This dropped to over a quarter (28 per cent) in the Prairie Provinces, leaving 72 per cent of residents who have started saving for retirement in this region.
- 62 per cent of residents in the Prairie Provinces and 61 per cent in Ontario are confident that real estate can be relied upon for expected income in retirement, whereas half (50 per cent) of Atlantic Canadians feel the same.
- Three-quarters of residents in the Prairie Provinces and 70 per cent in Ontario are confident their personal investments can be relied upon for expected income in retirement versus 58 per cent of those in Atlantic Canada.

Reinforcing the value of professional advice
The RISE survey found that Canadian pre-retirees who work with an advisor are nearly 50 percentage points more likely to be saving for retirement compared to those who have never worked with one (92 per cent versus 43 per cent).

Those who currently work with an advisor are more than twice as likely to have a written retirement income plan than those who don't work with one now but have in the past (52 per cent versus 22 per cent, respectively).

"Taking proactive measures is the best way to ease retirement concerns and bridge the gap between worries, expectations and reality. While retirement may seem far away and unpredictable, there are steps you can take to minimize risks and be prepared," said Michael Doshier, head of Retirement Marketing for Franklin Templeton Investments. "Getting advice and having a written plan can ease concerns and put you on the path to a successful retirement."

About the survey
Franklin Templeton Investments' Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,017 Canadians, 2,002 Americans and 2,004 UK respondents ages 18 and older. The survey was administered in all three countries from January 8 to 22, 2015 by ORC International's Online CARAVAN®.

About Franklin Templeton Investments
Franklin Resources, Inc. [NYSE: BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California–based company has more than 65 years of investment experience and over US$871 billion (over C$1,107 billion) in assets under management as of January 31, 2015.

For more information on the survey, please visit www.franklintempleton.ca/rise. Connect with Franklin Templeton on Twitter (@FTI_Global). Read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world and the Investment Adventures in Emerging Markets blog from Mark Mobius (@MarkMobius), executive chairman of Templeton Emerging Markets Group.

Copyright © 2015. Franklin Templeton Investments Corp. All rights reserved.

SOURCE Franklin Templeton Investments Corp.

Image with caption: "Franklin Templeton Investments' 2015 Retirement Income Strategies and Expectations (RISE) survey finds more than two-thirds of Canadians (68 per cent) experience stress and anxiety when thinking about retirement savings and investments. For more retirement statistics and information, please visit www.franklintempleton.ca/rise. (CNW Group/Franklin Templeton Investments Corp.)". Image available at: http://photos.newswire.ca/images/download/20150224_C7361_PHOTO_EN_12485.jpg

For further information: Media contact: Sarah Kingdon, Corporate Communications, Franklin Templeton Investments, 416.957.6191

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