BMO poll: Canadians think they need to save $1.7M for retirement

The latest poll by BMO shows that Canadians think they need to save $1.7 million in order to retire. It’s 20% more than in 2020.

Such a huge number is the largest sum since BMO began tracking it 13 years ago. It’s also a significant hike from the $1.4 million reported only 2 years ago.

According to Caroline Dabu from BMO Financial Group, the results reflect Canadians’ fears about today’s economic conditions, especially inflation and growing prices.

“An average Canadian is definitely feeling the rising inflation costs,” – she said.

“That’s why it’s no surprise that Canadians believe they will need more to retire.”

The drastic increase in Canada’s inflation in 2022 outpaced wage growth, affecting purchasing power for most families and intensifying fears about their future. The BMO poll shows that only 44% of respondents are sure they will have enough funds to retire the way they planned, which is 10% less than in 2020.

However, although the $1.7 million figure does sound huge for working-age Canadians, according to Dabu, it says more about the economic mood than about real-life retirement needs.

“When we’re working with clients, we see that many of them really overestimate the amount they need to retire,” – she explained.

“Of course, it’s all individual, but $1.7 million, in my opinion, is too much.”

Although growing inflation may require some adjustments to a retirement plan (e.g. slightly larger monthly savings for young workers, or changing cash flow for those who are close to retirement), Dabu believes these changes don’t necessarily have to be significant.

“The survey shows that 53% of Canadians didn’t know how much they will actually need to retire,” – she noted.

About 22% of Canadians plan to retire between the ages of 60 and 69. The average age is 62.

Millennials and Generation Z show the strongest concerns about their ability to save and invest now, the poll says. Nevertheless, all age groups (74% of respondents) say they worry about how today’s economic conditions will influence their financial situation. In addition to it, 59% of Canadians say the current economic conditions have already impacted their confidence in achieving their retirement goals.