Canadians’ Preparation for Retirement (CPR) — Complete Document
Using the stochastic version of the innovative Canadians’ Preparedness for Retirement (CPR) calculator – which, for the purposes of this report, computes 25 simulations for each household and aggregates the results – the report finds the following core results, weighted using the 2016 Census.
- If retiring at their intended age of retirement and converting all their financial wealth into annuities (which excludes business and housing equity) at that moment, 84% of Canadian households were prepared for retirement; 18% had less than 4 chances out of 5 of being prepared.
- The average preparation index is 117 (which means that households would replace 117% of their pre-retirement consumption) but, as all averages do, this hides a wide variety of situations.
- Lower income households are generally very well prepared – over 90% of households with an income per person below the median are projected to be “prepared”.
- Unsurprisingly, households most at risk of being “unprepared” largely fall into the sub-group with higher-than-median income, but no RPP or savings; the average wage income of the group deemed “prepared” is significantly lower than that of the “unprepared” group. Those with DB RPPs are better prepared than average.
- Probabilistically, the vast majority of households are almost certain to be “prepared”; a very small minority face dire prospects, while about 7% of households face a 35% to 65% probability of being prepared for retirement. Only 18% of households have less than an 80% chance of being prepared.