Advice for all life stages as health care, the unexpected and
running out of money are cited as key retirement concerns
TORONTO, Jan. 24, 2017 /CNW/ - A new
CIBC (TSX:CM) (NYSE:CM) poll finds that nearly
half (46 per cent) of Canadians do not
have a financial plan in place to reach their goals, despite many
feeling concerned about their retirement years.
"While most of us have a fairly good sense of our financial
goals, so many Canadians do not have a clear road map in place to
achieve what they want today – and tomorrow," says Sarah Widmeyer, Managing Director and Head of
Wealth Strategies, CIBC. "Whether the goal is to eliminate debt,
save more, or retire early, you can achieve success with a
financial plan."
Key poll findings include:
- 54 per cent of Canadians surveyed have a
financial plan, with
- 64 per cent of them having a long-term
plan that identifies their savings goals and the steps to achieve
them;
- And 36 per cent who describe it as only a
budget they review regularly, a short-term plan or 'other'.
- 46 per cent of Canadians surveyed
do not have a financial plan
- with 42 per cent of them saying they 'have
a pretty good idea' and don't need to write it down.
- When thinking about retirement, just over half (51 per
cent) are most worried about increasing health care
costs, 45 per cent are concerned about how to
manage unexpected expenses, and 43 per cent
worry that they won't have enough money to live the life they
want.
'Life gets in the way'
According to previous CIBC polls, 'paying down debt' has been
the top financial priority for Canadians for seven straight years,
indicating few people are making headway on their goals.
"We all aim to have a sufficient nest egg for retirement and
money to handle the unexpected, but everyday life has a tendency of
getting in the way," says Ms. Widmeyer. "By setting out a clear
path to your goals, a financial plan can help you stay on track. It
also gives you the confidence to manage surprises, so that setbacks
don't put your retirement dreams and other goals at risk."
The poll finds that having a financial plan in place makes
Canadians feel more confident in their ability to manage unexpected
changes in their finances. Additionally, those who have a financial
advisor (61 per cent) also feel better able to
manage setbacks. The poll surveyed Canadians with household incomes
above $100,000.
A financial plan and a budget are not the same: But
both are important
The poll findings show that even among those who do have a
financial plan, more than a third (36 per cent)
appear to be confused about how it differs from a budget, pointing
to a limited understanding of the full value and purpose of a
financial plan.
"While budgeting and financial planning go hand-in-hand, a
budget alone is insufficient in crafting the life you want in the
future," says Ms. Widmeyer. She adds that confusing a budget with a
financial plan may leave Canadians ill-prepared.
Ms. Widmeyer describes a financial plan as a clear, written
report detailing an individual's personal goals, financial needs
and priorities in areas such as income and expenses, taxes,
mortgage planning, education needs, retirement, estate planning,
and insurance. A financial plan also incorporates assumptions like
inflation, the time to a goal and expected rates of return, which
many may miss on their own, she adds.
"There are many things to consider depending on your life stage,
income and lifestyle expectations," says Ms. Widmeyer. "Is it
better to pay down debt or save? Are you saving enough? Could you
possibly retire earlier than you thought? These are some of the
questions a financial plan can help you answer and where the real
value of a plan lies."
Tips to get started
For those who are unsure of where to start, Ms. Widmeyer offers
these tips:
- Identify your short-term and long-term
goals
- Take a detailed look at your budget
- Create a plan setting measurable and time-based
goals
- Review your progress annually
"Now is the perfect time to speak to a financial advisor who can
help you identify and prioritize your goals and set a plan to
achieve them," adds Widmeyer. "The keys to success are to have a
plan in place, review your progress annually, and then make any
changes as needed. This will keep you on track to achieve what's
important to you."
A plan for ages
- In your 20's and 30's – When you're
starting out, it's important to manage debt effectively and keep an
eye on savings. Taking advantage of the Home Buyer's Plan can help
you build a down payment for your first home, while saving through
a TFSA could save your RRSP contribution room for years when you're
likely to earn a higher income. Read Paul and Andrea's story.
- In your 40's and 50's – For the sandwich
generation, it's all about balance. Competing priorities pull you
in different directions, and can make it difficult to stay on
track. Look for ways to maximize savings through Registered
Education Savings Plans, and be sure to balance your portfolio to
fit the right time horizon, risk tolerance and accurately forecast
future cash flow. Read Xue and Mei-Lien's story.
- In your 60's and beyond – For those at or
nearing retirement, it's important to understand your new income
needs, lifestyle and plan for any unexpected health costs in order
to set a clear course for the years ahead. Knowing the right time
and amount to withdraw from Registered Retirement Income Funds to
reduce tax liabilities and continue saving for later years, while
discussing your estate can help protect your wealth and minimize
taxes. Read Andrew and Jennifer's story.
KEY POLL FINDINGS:
Percentage of Canadians surveyed with a financial plan detailing
out financial decisions and activities for their household:
Top reasons Canadians surveyed without a financial plan feel
they do not need one:
I have a pretty good
idea of what I need to do and don't need to write it
down
|
42%
|
My situation is
pretty simple and I don't see the need for one
|
26%
|
Canadians' surveyed top three most important goals for having a
financial plan:
Saving for
retirement
|
53%
|
Eliminating credit
card or line of credit debt
|
38%
|
Paying off
their mortgage sooner
|
38%
|
Top retirement concerns among Canadians surveyed:
Increased health care
costs
|
51%
|
Managing unexpected
costs (e.g. health-related expenses, long-term care)
|
45%
|
Not having enough
money to live the life I want
|
43%
|
Confidence of those with or without a financial plan in their
ability to manage an unexpected life event or scenario:
|
Have a
financial
plan
|
Do not
have a financial
plan
|
Have a
financial
advisor
|
Do not
have a
financial
advisor
|
Someone in the
household losing their job suddenly
|
70%
|
58%
|
69%
|
57%
|
A family illness or
disability that left me or a family member unable to work for a few
months
|
77%
|
72%
|
78%
|
68%
|
Medical expenses not
covered by my insurance provider
|
77%
|
71%
|
78%
|
67%
|
A sudden, unexpected
financial emergency (e.g. urgent home renovation, car
repairs)
|
88%
|
80%
|
87%
|
80%
|
Divorce
|
51%
|
48%
|
52%
|
46%
|
Growing
family
|
57%
|
59%
|
60%
|
55%
|
Financial Plan Poll Disclaimer:
From January 5 to 9, 2017,
an online survey was conducted among 1,007 Canadian adults with a
household income greater than $100,000 who are Angus Reid Forum panelists. For
comparison purposes, a probability sample of this size has a margin
of error of +/- 3%, 19 times out of 20.
About CIBC
CIBC is a leading Canadian-based global financial institution with
11 million personal banking and business clients. Through our three
major business units - Retail and Business Banking, Wealth
Management and Capital Markets - CIBC offers a full range of
products and services through its comprehensive electronic banking
network, branches and offices across Canada with offices
in the United States and around the world. Ongoing news
releases and more information about CIBC can be found
at www.cibc.com/ca/media-centre/ or by following on
Twitter @CIBC, Facebook (www.facebook.com/CIBC) and
Instagram @CIBCNow.
SOURCE CIBC - Consumer Research and Advice