Eighty-nine percent of Canadians plan to rely on the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) to cover costs during their golden years, according to a BMO Financial Group study.
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Further, almost one-third (31%) reported they expect to rely “heavily” on the CPP/QPP, despite the fact that the average monthly CPP payout is less than $600.
“Given the amount that the CPP or QPP pays out, Canadians should not rely on them as a primary source of income to fund their retirement,” says Chris Buttigieg, senior manager, Wealth Planning Strategy, BMO Financial Group. “Rather, they should consider the CPP and QPP to be a supplementary component of their overall retirement income solution and focus on…contributing to an RRSP on a regular basis.”
He adds the landscape is changing for those with workplace pensions. “Not only are there fewer of us covered by [these] pensions, but there’s also a shift happening from defined benefit plans — which specify the fixed pension amount an employee will receive upon retirement — to a defined contribution model where retirement income depends on how much is saved and how the contributions are invested. In a defined contribution plan, there’s no guarantee of the amount….”
The study also identified the sources of income Canadians plan to use to fund their retirement outside of the CPP/QPP:
- Personal savings such as RRSPs, TFSAs, etc. (88%)
- Part-time job (59%)
- Sale of home/property (49%)
- Inheritance (40%)
- Hoping to win the lottery (34%, including 14% relying “heavily”)
- Support from family/children (28%)
|Region||% who are relying on the CPP/QPP to fund their retirement||% who are relying on their personal savings to fund their retirement||% who are relying on winning the lottery to fund their retirement|