Inflation adds uncertainty for Canadians trying to look past the pandemic and refocus on their financial future – RBC poll – Yahoo Finance

Impact of inflation on retirement finances now one of Canadians' top concerns

RRSPs rebound, as financial priorities shift to longer-term saving and investing

Investors willing to pay fees for opportunity to gain higher returns

TORONTO, Jan. 21, 2022 /CNW/ - With inflation reaching the highest levels in the past 30 years, Canadians trying to refocus on their financial future now face a new uncertainty: the effects of rising inflation on their retirement savings. According to RBC's annual Financial Independence in Retirement Poll, inflation has now moved into the top three concerns Canadians have about retirement for the first time in more than a decade.

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"When assessing value, investment performance after fees is what really matters. It's encouraging to see that younger Canadians understand how crucial this is in achieving your retirement savings goals and building a strong financial future."

Inflation is also limiting the ability of Canadians to increase any savings, as it continues to drive up the costs of fixed expenses a key savings barrier referenced by 29% of poll respondents, with the largest number of these (40%) being aged 25 to 34. A majority (85%) of this younger age group also worries the most about trying to balance saving for today versus saving for their future.

There is a key difference across all age groups, however, despite the uncertainties posed by the pandemic and rising inflation. Today, almost half (48%) of Canadians have a financial plan and the majority (86%) of those say they are feeling positive about their financial future because of that plan.

"The unexpected has changed lives over the past two years, but if you have a plan, it's easier to adapt to those changes," says Stuart Gray, Director Financial Planning Centre of Expertise, RBC. "A plan helps you keep on top of your finances, so you know what adjustments you can make for changing circumstances while saving for today and investing for the future."

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One strong indicator that Canadians want to refocus on their financial future: RRSPs are making a big comeback. After seven years of trending downward and last year's historic low of 46% RRSPs have rebounded and now over half (53%) of Canadians have RRSPs in place to save and invest for their retirement. Also, within those RRSPs, more Canadians are holding mutual funds (36% vs. 30% last year), stocks (20% vs. 14%) and ETFs (11% vs. 7%).

Another future-focused indication in poll findings: the percentage of Canadians who are building their investment portfolios has risen to 28% from 25% last year (and 10 points higher than a decade ago). Of particular note, younger investors aged 25 to 34 are also expressing the most interest in building these portfolios (32%). Since the onset of the pandemic, these younger investors are also focusing more attention on the value of their investments (22%) and almost half (48%) indicate they are willing to pay fees if this offers the opportunity to gain higher returns on those investments.

"When assessing value, investment performance after fees is what really matters. It's encouraging to see that younger Canadians understand how crucial this is in achieving your retirement savings goals and building a strong financial future," adds Gray. "Whenever you want advice, our financial advisors are here to help in person or through our MyAdvisor digital advice platform, which connects you to an interactive, personalized plan where you can review forward-looking projections and try out different savings scenarios. This makes it easy to see how changes you make to your savings and investments today can impact your finances in the future."

Fast Facts: RBC 2022 Financial Independence in Retirement PollSelected findings National and regional

Top concerns about retirement finances

NAT'L

BC

AB

SK/MB

ON

QC

AC

Having enough savings

47%

43%

44%

47%

47%

52%

44%

Maintaining my standard of living

36%

39%

31%

34%

36%

42%

29%

Impact of inflation

29%

33%

31%

28%

29%

26%

32%

The cost of healthcare

27%

30%

25%

21%

24%

31%

29%

Outliving my savings

25%

29%

30%

29%

28%

16%

29%

Barriers to saving more

NAT'L

BC

AB

SK/MB

ON

QC

AC

Income too low

36%

38%

41%

45%

37%

30%

34%

Fixed expenses too high

29%

35%

38%

37%

29%

22%

24%

No money left over at the end of the month to save

26%

25%

30%

32%

24%

25%

31%

Unexpected expenses (dentist, car repairs, etc.)

26%

32%

36%

29%

23%

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Inflation adds uncertainty for Canadians trying to look past the pandemic and refocus on their financial future - RBC poll - Yahoo Finance