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65% of Canadians are saving for retirement, census shows

65% of Canadians are saving for retirement, census shows
From CBC - September 13, 2017

Two-thirds of Canadian households are setting aside money for retirement, taking advantage of either a registered pension plan, an RRSP or a tax-free savings account, Statistics Canada said Wednesday as it released the latest batch of numbers from the 2016 census.

Of 14 million households, 65.2 per cent made a contribution in 2015the most recent year for which data was availableto one or more of the three major savings vehicles, an apparent counterpoint to the prevailing narrative that too many Canadians take a cavalier approach to retirement.

Different generations took different approaches: Major income earners aged 35 to 54 were prone to make use of registered pension plans and RRSPs, while those younger than 35 and those older than 54 were more likely to contribute to a TFSA.

Or, in Statistics Canada's words: "Participation in savings plans followed strong life-cycle patterns."

1st time question on census

It's the first time the census has probed the question, taking advantage of tax data to paint a more accurate picture of just how seriously Canadians take retirement planning a picture which experts say has long been distorted by suspect data and aggressive investment marketing.

"I think things in general are still in pretty good shape when it comes to preparing for retirement," said Fred Vettese, chief actuary at Morneau Shepell in Toronto.

"For the most part, when you look at middle-income Canadians they are saving. So one of the problems with the statistics is that they end up being misleading."

Vettese said he's particularly frustrated by the oft-cited national household saving rate, which landed at 4.6 per cent in the second quarter of this year, compared with 20 per cent in 1980.

"That's the stat that people keep on harping on, and it has dropped a lotbut that household saving rate is a funny number."

CPP savings not included

For starters, household saving does not include Canada Pension Plan contributions"for most people, you figure that their CPP contributions are savings for retirement," he saidwhich means federal efforts to enhance the pension plan wo not change that figure "one iota."

What's more, Vettese said, the household saving rate deducts what retired Canadians might take out of their nest egg once it becomes a source of income.

"So, with an aging population and more people drawing an income then used to be the case back in the 1990s, obviously it's going to look like people are saving less."

Research compiled by actuary Malcolm Hamilton of the C.D. Howe Institute suggests that the rate of retirement saving for employed people has actually almost doubled in recent decades.

Surge in retirement saving

Older Canadians are better savers

Impact of low interest rates

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