Canadians think they'll need a depressing $1.7 million in order to retire

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Think you’ll be able to save enough money to retire as planned? Most Canadians don’t.

According to a new survey from the Bank of Montreal (BMO), Canadians think they’ll need at least $1.7 million saved in order to retire, and many aren’t confident they’ll get there.

That depressing number has gone up drastically from people’s expectations of $1.4 million two years ago. It’s also the largest figure since BMO began this annual survey 13 years ago.

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These expectations come after inflation hit a record-breaking high of 8.1% last summer. It has since dropped to 6.3% in December and is expected to decline to around 3% by the end of the year, according to BMO.

As Canadians are in the thick of the rising cost of living, BMO found that 74% are concerned about how current economic conditions will affect their financial situation, and 59% believe this will affect their confidence in meeting their retirement goals.

Still, the survey also found that Canadians are prioritizing retirement savings as “both contributions and account holdings have increased from the previous year.”

“While the anticipated headwinds in 2023 will understandably prompt concerns about how inflation and interest rates will affect our finances, Canadians remain resilient and are taking proactive measures to protect and invest in their retirement nest egg,” said Nicole Ow, head of retail investments at BMO.

This is seen in the average amount held in RRSPs nationally — $144,613, a 2% increase from 2021 ($141,923).

BMO adds 43% of Canadians have already contributed to their RRSPs for the 2022 tax year, and another 14% plan to contribute before the March 1, 2023 deadline.

While 22% of Canadians plan to retire between the ages of 60 and 69, millennials and Gen Z are the most concerned about their ability to save and invest right now, according to the survey.

The BMO RRSP Survey was conducted by Pollara Strategic Insights via an online survey of 1,500 adult Canadians conducted between November 4 and 7, 2022. The margin of error for a probability sample of this size is ± 2.5%, 19 times out of 20.