It’s a common question, especially amid increasing financial pressures. With daily concerns often taking precedence, long-term retirement planning can easily be overlooked.
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Financial Anxiety Among Canadians
A new survey from CPP Investments, conducted for Financial Literacy Month in November, reveals that 61% of Canadians fear running out of money in retirement. This anxiety is even more pronounced among adults aged 28 to 44, with 67% expressing concern, and it affects women (66%) more than men (55%). Given rising costs, longer lifespans, and the increasing struggle to make ends meet, it’s no surprise that nearly six in ten Canadians report feeling financial stress daily.
Rising Retirement Savings Goals
The survey highlights that inflation and affordability are top concerns for many Canadians. Over the past year, the average retirement savings goal has increased from $700,000 to $900,000—a nearly 30% increase in just 12 months. Young people are particularly stressed about their finances; 63% of Canadians aged 18 to 24 feel a lot of anxiety about making the wrong decisions with their money. This anxiety decreases with age, with only one-third of respondents aged 65 and older sharing the same concern.
The Role of the Canada Pension Plan (CPP)
“Running out of money in retirement is a real worry for Canadians, which is understandable given life expectancy is on the rise,” said Michel Leduc, Senior Managing Director at CPP Investments. Building a solid understanding of personal finances is crucial, and seeking resources to improve financial literacy can help manage money more effectively.
Fortunately, more than 22 million Canadians have a base for their retirement plan through the Canada Pension Plan (CPP). The benefits are payable for life and are indexed to inflation, providing a safety net for retirees.
Canada’s Pension Plan Needs to Invest More Domestically: Time to Rewrite the CPPIB Act, Why?
Canada Cost of Living Increase 2024: CPP, OAS, GST/HST & CCB
Canada Pension Boost 2024: Major Increases in CPP and OAS Benefits
Claiming CPP When Leaving Canada: What happens to CPP Contribution if I leave Canada?
Canada Pension Boost: Expected CPP and OAS Increase in 2024? Future Trends
Understanding CPP Benefits
Recognizing the value of the CPP can boost confidence in retirement savings. The survey indicates that only 24% of Canadians aged 35 to 64 who are unfamiliar with the CPP believe their savings will last throughout retirement, whereas 71% of those very familiar with the CPP feel confident about their financial future.
Financial Stability of the CPP
The CPP Fund, managed by CPP Investments, holds over $646 billion in assets, making it one of the world’s largest pension plans. With a 10-year annualized net return of 9.1% (as of June 30, 2024), CPP Investments ranks among the top-performing institutional investors globally. As Canadians live longer, they can feel secure knowing CPP benefits will be available throughout retirement. According to the latest report from the Office of the Chief Actuary of Canada, the CPP is projected to be financially sustainable for at least the next 75 years.
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