While the majority of older Canadians say that their finances have not been significantly impacted negatively by COVID-19 (69 per cent), the pandemic has led to them re-evaluate how they save, invest and even spend their money, according to a recent RBC Insurance study. When it comes to spending, Canadians aged 55 to 75 have been providing financial support in various ways, by helping family/friends in need (39 per cent), increasing commitments to a family legacy (31 per cent) and to charitable giving (28 per cent).
The poll also revealed that one-in-five older Canadians (21 per cent) have had to dip into their retirement funds in order to pay for everyday expenses, rising to 30 per cent for those with a household income less than $40k. Moreover, a third (36 per cent) say they are not on track with their financial goals, and a similar proportion (33 per cent) say that the pandemic has left them feeling less confident that they’ll have enough money throughout their retirement to be able to afford the lifestyle they would like to lead.
“We know that the uncertainties of the pandemic have impacted Canadians in a variety of ways and we wanted to further explore how financial fluctuations may have affected those who are nearing retirement, or have recently retired,” said Selene Soo, Director, Wealth Insurance, RBC Insurance. “Understanding the needs of Canadians during the pandemic helps us understand how to best support our clients during a challenging time.”
How Canadians are re-evaluating the way they save and invest:
Half (50 per cent) of older Canadians have been able to save more money since the start of the pandemic, rising to 59 per cent among those who use a financial planner. In fact, the study found 45 per cent are accumulating savings that were earmarked for vacation or entertainment, and holding them for future entertainment spending (55 per cent), investing (29 per cent), and to pay down debt (18 per cent).
Two-in-three (64 per cent) say they’re on track with their financial goals for retirement, while one-in-three (36 per cent) are not. Many are also looking to make changes to their financial portfolio, where two-in-three (66 per cent) are interested in safer investment options that guarantees income.
What’s more is 20 per cent of older Canadians who worked with a financial planner are more confident that they’ll have enough money to last throughout their retirement, whereas only 11 per cent of those who never worked with a financial planner feel confident. The primary reasons older Canadians work with a financial planner include receiving financial advice, help in planning for their future and retirement, and the ability to follow/manage their investments.
“As Canadians approach retirement, financial needs and goals begin to change including the way we invest our savings,” adds Soo. “Although it’s beneficial to take a proactive role and doing your own research on investment tools, speaking with a professional like a financial planner or insurance advisor can help protect the money you’ve worked so hard to save. This can help ensure you have enough income to last during retirement or leave a legacy.”
In this climate of uncertainty, many are looking to make other tweaks to their portfolio, including new strategies to help their money last through retirement (57 per cent), and adjusting their portfolios and risk tolerance (30 per cent).
When it comes to saving for retirement, Canadians should consider the following to help protect, grow and preserve their money:
- Consider investing in products such as Segregated Funds including Guaranteed Investment Funds (GIFs) that offer unique benefits that can help you reach your retirement income. Seg funds helps your money grow while providing a guarantee to keep your original investment safe and provides unique benefits for estate planning.
- Look at different investment options to help during retirement such as Annuities that provide a predictable income stream for as long as you live, regardless of whether financial markets rise or fall.
- Speak to a financial planner or insurance advisor to discuss options and ensure you’re on track to meet your long-term financial goals.