While more than half of Canadian investors (52%) are feeling positive about their financial prospects, this represents a 3% decline from confidence levels in 2013, and is below the global average of 56%, finds a BlackRock survey.
The results are a reversal from last year, when Canadians were more financially optimistic than their global counterparts. As well, only 13% of Canadians see the economy getting better, compared with 22% globally.
According to the global survey, the top priorities for Canadians are saving money (53%), saving for retirement (42%), and paying off debt (41%).
Additional findings include:
- 68% say the high cost of living is the biggest threat to their financial futures, compared with 46% for inflation and 45% for the state of the economy;
- seven in 10 who use an advisor are optimistic about their financial futures, compared with 45% of those who do not get advice; currently only 29% of Canadians use an advisor.
- 61% say they take financial planning seriously;
- 21% say they spend not time reviewing their savings and investments; and
- 45% are maximizing contributions to their workplace pension plans; 46% know what the maximum contribution is.
“While Canadians seem to place a high priority on long-term planning, their short-term actions could hinder making these goals a reality,” says Noel Archard, managing director, Head of BlackRock Canada. “Concerns about debt and the cost of living, including housing, are high in Canada, and that seems to have put many in a situation where they are not taking advantage of some relatively simple things, like maximizing their workplace pension plans.”
Bills, debt and too much cash
Canadians say they spend 43% of their income on housing costs (mortgage or rent plus utilities) — third globally to the Netherlands and Sweden — and have only 23% of income left over to save and invest.
Faced with financial uncertainty, Canadians seem to be holding larger amounts of non-income-generating cash than they think they should. Respondents say they held 62% of their savings and investments in cash — higher than the global number of 59% — even though they say that, ideally, only 27% of savings and investments should be held in cash. Those without an advisor say they have a far larger cash allocation (70%) than those with an advisor (47%).
Saving for retirement – or not?
Nearly three-fifths say they are saving for retirement. But only 30% say they are well-prepared financially for retirement; 33% say they will likely never be able to retire.
On average, respondents say they will need an annual retirement income of $69,700, while the youngest age-group (25-34) expects to need far more — $94,800 a year.