Our series of blog posts about retirement planning continues with this month’s article. The level of financial literacy among Canadians and their active engagement in retirement planning are critical determinants of their preparedness for their post-working years. A January 2025 survey revealed that a substantial majority of Canadians, 61%, do not have a financial plan in place for the year, and an even larger proportion, 70%, do not utilize budgeting tools to manage their finances. This lack of proactive financial planning and budgeting suggests that many individuals may not be adequately preparing for their long-term financial needs, including retirement. Interestingly, the survey also found that Canadians who work with a qualified financial professional are significantly more likely (50%) to feel positive about their financial outlook for 2025 compared to those who do not. This highlights the potential value of professional guidance in developing financial plans and fostering a sense of confidence about the future.
Recognizing the importance of financial knowledge and skills, financial literacy programs are available through different organizations that offer resources and guidance to help individuals improve their financial literacy. Their programs emphasize the foundational elements of sound financial management, such as creating and adhering to a budget, developing savings habits, understanding credit scores, and engaging in retirement planning. These initiatives underscore the idea that improving financial literacy is a continuous process that can empower individuals to make more informed decisions about their money, ultimately contributing to greater financial security in retirement.
While many Canadians express a desire to save for retirement, as evidenced by a December 2024 survey where 58% of those with financial goals included retirement savings as a priority, a significant gap exists between setting goals and having a comprehensive plan to achieve them. The same survey indicated that only 33% of Canadians currently have a financial plan, and 59% do not have a household budget for the year. This suggests that while the intention to save for retirement is present for many, the lack of a structured approach through financial planning and budgeting may hinder their ability to translate those intentions into meaningful action and adequate savings.
Financial literacy levels also appear to vary across different demographic groups. Research indicates that women, for example, may have had less exposure to financial education early in life, with only 27% recalling learning about money management in school compared to 35% of men. Younger Canadians also face their own set of challenges, with many in Generation Z and Millennials reporting that they don’t know where to begin with retirement planning or feel that retirement is too far in the future to be a pressing concern. These disparities highlight the need for tailored approaches to financial education that address the specific knowledge gaps and perceptions within different segments of the population.
The emotional aspect of retirement planning is also evident. A survey conducted by CPP Investments revealed that a majority of Canadians (61%) express a fear of running out of money during retirement, with this anxiety being particularly pronounced among younger adults and women. Interestingly, the same survey found that individuals who are more familiar with the Canada Pension Plan tend to have greater confidence in their savings lasting throughout retirement. This suggests that improving financial literacy specifically around public pension benefits can play a role in alleviating retirement-related anxiety and fostering a greater sense of security about the future.
My Role as Your Advisor
- Personalized Financial Planning:
I will work with you to create a comprehensive financial plan tailored to your specific needs and goals. - Investment Advice:
I can provide guidance on investment strategies, asset allocation, and risk management. - Retirement Projections:
I can use financial planning software to generate detailed retirement projections and stress-test their plan under various scenarios. - Regular Reviews and Adjustments:
I would conduct regular reviews of your plan and make adjustments as needed to ensure you stay on track. - Education and Support:
I would provide ongoing education and support to help you make informed financial decisions. - CPP and OAS information:
I would help you get the most accurate information available regarding your future CPP and OAS payments.
By providing clear and actionable advice, I can help you navigate the complexities of retirement planning and achieve your financial goals. Contact me today at Ripple Effect Financial to get your financial plan started, allowing you to live happily through your retirement years.
