The dream of retirement: a time for relaxation, travel, and enjoying the fruits of one’s labour. However, for many Canadian retirees, this vision is marred by the financial responsibility of supporting their adult children. According to a recent report by Fidelity Investments Canada, nearly 60 percent of retirees find themselves financially assisting their grown-up children, impacting their own financial stability and retirement plans.

The report sheds light on the pervasive trend of retirees dipping into their savings to aid their adult children with day-to-day expenses, significant life events like weddings or home purchases, and even contributing to education funds for grandchildren. This act of generosity, while heartfelt, poses significant challenges for retirees already navigating the complexities of fixed incomes and rising costs.

Inflation emerges as a formidable foe in the retirement landscape, with 82 percent of retirees feeling its pinch on their finances. Moreover, the escalating cost of living serves as a roadblock for many pre-retirees, causing 43 percent to delay their retirement plans. Despite these hurdles, Peter Bowen, vice president of tax and retirement research at Fidelity, underscores the importance of robust financial planning to weather uncertain economic times.

The report highlights a striking correlation between financial preparedness and having a written financial plan. Notably, 88 percent of Canadians equipped with a detailed financial blueprint feel confident about their retirement prospects, compared to a mere 56 percent without one. However, the data reveals a concerning gap, with only 27 percent of Canadians having such a plan in place.

Regional disparities further underscore the importance of proactive financial planning. Quebec leads the charge with 34 percent of residents having a written financial plan, while residents of the Prairies and British Columbia exhibit a higher propensity to work during retirement, perhaps indicating a need to supplement income amidst financial strains.

Moreover, gender disparities come to light, with 87 percent of women with a financial plan expressing optimism about retirement, compared to 60 percent without one. These findings underscore the imperative for tailored financial strategies that account for individual circumstances and aspirations.

As Canadians grapple with persistent cost-of-living pressures, the findings of this report serve as a wake-up call. While inflation may fluctuate, the unwavering commitment of retirees to support their loved ones remains constant. However, by embracing proactive financial planning and seeking guidance from financial advisors, Canadians can navigate these challenges and strive towards realizing their retirement dreams.

Disclaimer: The information in this blog is based on the findings of Fidelity Investments Canada’s annual retirement report for 2024. The views and opinions expressed herein are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.