Entry 4
Poll: Fewer Atlantic Canadians invest in retirement
Chapter 10: COnsumption and savings
Some won't contribute to the RRSPs, while others are withdrawing the amount they have in it, all due to their woes
More than half of Atlantic Canadians don’t plan to contribute to a retirement savings plan this year, Scotiabank has found. In its annual investment poll released Monday, the bank found that of those 54 per cent, eight in 10 are not investing in a retirement savings plan because of a lack of money, high debt or other costs. In addition to fewer people saving for retirement, more are withdrawing funds from their RSPs. The bank found that 37 per cent of Atlantic Canadians took money out of their retirement savings to buy a house, pay down debt or cover day-to-day living expenses. The combination of fewer people saving for retirement and more people borrowing from their savings could delay retirement.
Bill Black, former Maritime Life chief executive officer, said the poll underscores the fact that Canadians aren’t putting enough away for retirement. “It also suggests it’s not because they don’t care but because they are finding it hard to find enough money to do so,” Black said. “One of the things happening throughout most OECD countries is that even if the economy is improving, frequently middle-income earners are not getting their fair share of that improvement. That is certainly true in Canada and one of the reasons people are having a tough time saving for retirement.” With the 2013 deadline to contribute to registered retirement savings plans two months away, Scotiabank is encouraging Atlantic Canadians to meet with a financial adviser. Paul DeWolfe, regional vice-president of Scotia Private Client Group Atlantic, said Maritimers tend to invest in their families, friends and communities before themselves. “But at some point you have to think about yourself and start to squirrel away a little bit for your retirement,” DeWolfe said in an interview. “It doesn’t have to be complicated or a lot, but if you give yourself enough time, it’s the little things that add up.”
He said an experienced financial adviser can develop a retirement savings plan tailored to someone’s personal goals. DeWolfe said the trend in Atlantic Canada to pull money out of retirement savings to buy a home is understandable but that saving for retirement is still important.
“It’s nice to get a mortgage paid down, but you still need funds to take care of yourself when you move past your working years.” Saint Mary’s University economics professor Ather Akbari said it is important to examine why people are not investing more in RSPs. “We need to examine where people are putting their money — if they are investing in other forms of assets that could be positive. But if people are just using that money for current consumption, it would certainly be a concern.”
For example, Akbari said if people are investing less in RSPs in order to purchase real estate, it could be a better investment if real estate prices rise faster than returns on financial assets. However, if people are using their money only to increase their consumption, such as buying a car or having a big wedding, then someone’s retirement could certainly be negatively affected, he said.
http://thechronicleherald.ca/business/1177834-poll-fewer-atlantic-canadians-invest-in-retirement
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