Financial Advice Quadruples Retirement Savings

Peter Bowen, VP, Tax and Retirement Research, Fidelity Investments Canada

For many of us, the idea of a Canadian dream is not grandiose but rather simple.

It is to work hard, support our family members in ways we can and save as much money as possible in our assets or bank accounts, with the ultimate goal of enjoying retirement off of those savings in relative comfort and doing things that we love – whether that is being an engaged grandparent, gardener, traveler, volunteer or more.

While this dream may be simple, the road to getting there for Canadians is more difficult than everfor two main reasons.

One, we are living longer. Life expectancy in Canada is now 82 years old and Statistics Canada recently published that centenarians – those aged 100 and older – are now the fastest growing segment in Canada. This means we have no choice but to work longer to fund a retirementthat could be as long as 30 to 40 years long.[1]

Two, interest rates are lower. From late 1970s to early 1990s, interest rates were around above 10 per cent, with the highest at 18 per cent. What that meant was that Canadians preparing for retirement could put their savings in an interest savings account and grow their money. Today, the interest rate is around 2 per cent – barely above the pace of inflation – which has made growing our savings in traditional savings accounts alone nearly impossible.[2]

For these reasons and more, half of Canadians say they do not feel financially prepared for retirement.[3]

However, academic research suggests there is hope through financial advice. According to CIRANO, a research body that consists of 230 professor-researchers in academic institutions in Canada and around the world, Canadians who work with financial advisors accumulate 3.9 times more in savings after 15 than those who do not.

“Living longer and low interest rates can be challenging. But that doesn’t mean you have to give up your Canadian dream because you don’t have to with financial advice,” saysPeter Bowen, Vice President, Tax and Retirement Research, at Fidelity Investments Canada. “Financial advisors can help Canadians with building and implementing customized strategies that can help them save more, invest those savings in assets that can protect and grow those savings, pay less tax and generally be prepared for life’s major events. The value of financial advice is proven by research and those without advice should seek advice today.”

Financial advisors are trained professionals, who are qualified to look at an individual’s financial, family, emotional and physical situations holistically and in detail, and provide advice with respect to financial planning, tax planning, estate planning, investment selection, portfolio construction, asset allocation, financial education and more. As part of a public education campaign to help Canadians with their retirement planning, Fidelity Investments Canada is encouraging all Canadians to start working with their financial advisor.

Fidelity Investments Canada is a leading provider of investment solutions for individuals and businesses in Canada. For over 70 years, including 30 years in Canada, Fidelity Investments has helped investors worldwide meet their financial goals by providing top investment solutions managed by worldclass portfolio managers. To learn more, visit www.fidelity.ca.

[1]http://www12.statcan.gc.ca/census-recensement/2016/as-sa/98-200-x/2016004/98-200-x2016004-eng.cfm

[2]http://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_v122544.pdf

[3]http://www.fidelity.ca/cs/Satellite/doc/retirement2020.pdf