Trading places: Canadians and Americans diverge on retirement savings habits

Williams notes that "the older we get, the greater the probability of unforeseen health issues – whether mental or physical – as well as rising prescription drug expenses or needing long-term care. We continue to notice an awareness of health care-related concerns, which are likely to increase as people age." While those younger than 55 expect that running out of money (33 per cent) will be a bigger concern in retirement than health or medical issues (23 per cent), the trend reverses significantly as age increases. Over a third (36 per cent) of those aged 55 to 64 expect health and medical issues to be their top concern during retirement, whereas 19 per cent anticipate their primary concern will be running out of money.

Anxiety higher among DIY (do-it-yourself) investors

Regardless of their specific concerns, 72 per cent of Canadians experience varying levels of stress when thinking about their retirement savings and investments. Notably, among those who report significant stress and anxiety, 76 per cent do not currently work with an investment advisor.

"Engaging professional investment advice can help alleviate some of the stress and uncertainty surrounding the prospect of retirement," said Williams. "Creating a retirement plan can help Canadians gain confidence in their preparations for whatever type of retirement they envision – whether that is working part-time, volunteering or travelling."

The numbers also demonstrate the value of professional advice when it comes to making retirement planning a priority: 91 per cent of pre-retirees who work with a financial advisor have started saving for retirement versus 52 per cent of those who have never worked with an advisor.

Individual retirement planning is particularly critical given that 63 per cent of Canadians do not have a workplace pension plan, according to the survey. The lack of pensions, according to 2015 Statistics Canada data¹, is particularly acute in the private sector, where just 22 per cent of employees have a workplace pension plan, a sharp contrast to the 60 per cent coverage rate for private sector employees in the US.

Among those who do have a workplace pension plan, complacency can be an issue: Almost half (48 per cent) of Canadians with a workplace pension plan do not know what their personal contribution rate is, and just 12 per cent (vs. 18 per cent in 2015) worked with their investment advisor when selecting investment choices in their workplace pension plan.

"We encourage Canadians to take a more active role in their retirement savings strategies and to engage the help of a financial advisor to create a comprehensive plan," said Williams.

Other key survey findings:

• Regionally, on the high end, 81 per cent of those not yet retired in the Prairie Provinces have started saving for retirement, but only 58 per cent of Quebec pre-retirees have started. Nationally, 70 per cent of Canadian pre-retirees are saving for retirement.
• Over half (53 per cent) of those in Atlantic Canada are very or somewhat concerned about outliving their assets or having to make major sacrifices to their retirement strategy vs. only 27 per cent in Quebec. Nationally, 44 per cent of Canadians are concerned about outliving their assets or having to make major sacrifices to their retirement strategy.
• 43 per cent of Canadian retirees say their expenses have increased since they retired, up sharply since 2015 (33 per cent). In contrast, the same survey response data in the US indicated very little difference between 2016 (38 per cent) and 2015 (37 per cent).

About the survey
Franklin Templeton Investments' Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,006 Canadians, 2,019 Americans and 2,003 UK residents ages 18 and older. The survey was administered in Canada from January 4 to 18, 2016, 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 180 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 approximately US$714 billion (C$966 billion) in assets under management as of February 29, 2016.

For more information, please visit franklintempleton.ca or connect with Franklin Templeton on Twitter (@FTI_Global) and read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world.

Copyright © 2016. Franklin Templeton Investments. All rights reserved.

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1} Source: Statistics Canada, July 2015.

SOURCE Franklin Templeton Investments Corp.