The real reason people fail to save enough for retirement — and what you can do to limit the damage

Perhaps as important as how much you need to save to retire is an understanding of the things that prevent people from saving enough in the first place — despite their best intentions.Illustration by Chloe Cushman/National Post files

While there are conflicting opinions on whether Canadians are saving enough for retirement, there is no doubt Canadians are not saving like they used to save. In fact, the household saving rate in Canada just fell dramatically to 0.8 per cent in the third quarter of 2018 from 3.4 per cent in the previous quarter.

Our household saving rate since 1981 has averaged 7.3 per cent, and the annual saving rate has not gone negative since 1933. As interest rates continue to normalize and we enter our tenth year since the last recession, it may be that 2019 is an unprecedented year in the history of Canadian saving (or lack thereof).

A 2017 World Economic Forum (WEF) white paper suggested a saving rate of 10 to 15 per cent may be required to afford to live comfortably to age 100. Everyone’s required saving rate is different and depends upon their unique circumstances, so rules of thumb from the WEF or anyone else for that matter need to be taken with a grain of salt.