Majority Of Canadians Plan To Rely On CPP For Part Of Retirement Funds

by Guest on January 14, 2013

Half of non-retired Canadians say they plan to retire by age 65 and expect Canada Pension Plan (CPP) to fund part of their retirement, according to a recent Leger Marketing survey for H&R Block
Canada. But less than one-third actually know how much to expect from CPP every month.

The same group of Canadians listed Canada Pension Plan, Registered
Retirement Savings Plans (RRSPs) and Old Age Security (OAS) as the top three
ways they planned to fund their retirements.

“Canadians who are not retired yet may be relying too much on CPP or Old Age
Security benefits as part of their retirement plan,” explains Cleo Hamel,
senior tax analyst at H&R Block Canada. “And with the recent changes to OAS,
you will not be able to access that benefit until age 67 if you were born on
or after February 1962.”

The survey also showed younger Canadians may be moving away from the
traditional RRSPs as the way to save for retirement. Young Canadians under
the age of 35 are more inclined to say they will rely on their Tax Free
Savings Account (TFSA) for their retirement savings than those aged 35 or
older.

“Before 2009, the RRSP account was really the only way to save for
retirement,” explains Hamel. “But the TFSA also offers tax sheltering
benefits with more flexibility than an RRSP. If you are just starting your
career or a family, there are reasons to be considering a TFSA where
withdrawals are not taxable in case you need to access funds for an
emergency.”

More about Canadians and retirement:

.         CPP payments: Seven out of 10 non-retired Canadians are unaware of
how much CPP pays out monthly. The payment depends on your contributions to CPP
while you were working. The maximum monthly benefit is just under $1,000.

.         Retire at 65, maybe: More than half of non-retired Canadians plan
to retire by age 65 but one in five admit to not knowing when they will be
able to stop working.

.         RRSPs are still popular: Fifty-six per cent of non-retired Canadians
said they were planning to use their RRSPs to fund part of their retirement.

The survey was completed online from November 27 to 29, 2012 using Leger
Marketing’s online panel, LegerWeb, with a sample of 1,165 Canadians 18
years of age or older.

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