According to the most recent RBC retirement poll, only 25% of Canadians expect to have enough retirement income to realize their dreams. The message isn’t very subtle as we head into RRSP season: contribute more to your RRSP.
It’s important to remember that this is a poll of what people think will happen, not an expert’s prediction. The poll says more about people’s expectations than it says about what will really happen.
It would be nice to live in a world where everyone got to realize their dreams, but life doesn’t always work out the way we want. I see the results of this poll as a sign that Canadians’ expectations are more realistic than what I remember from the tech boom.
A decade ago we didn’t realize it, but we were coming to the end of a huge bull run in the stock market. The TSX Composite had returned a compound average 16.4% from 1993 to 1999 inclusive. People talked seriously about extravagant retirement plans that started with
“Assuming I can make 15% to 20% per year on my retirement savings ...”
The craziest part was that nobody laughed at these unrealistic expectations. People took the inflated stock prices as a given and expected them to continue rising at an unprecedented pace throughout their retirements. Sadly, stocks were destined to drop sharply, particularly technology stocks.
It’s no fun to keep adding another year or two to how much longer you’ll have to work, or to lower the amount you expect to be able to spend each year. However, it’s better to be realistic than it is to jump into retirement and run out of money.