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Fewer Canadians confident about ability to achieve financial goals, with elderly especially worried

 

Haaruun Dhubat, Financial Post Staff | January 5, 2015 |
FotoliaOnly 61% of Canadians aged 55-64 were confident about their current financial goals, down from 74% in the most recent survey.

Canadians are entering the New Year with a less optimistic financial outlook than last, according to a CIBC poll.

While you binge-watch all five seasons of Breaking Bad in over the holidays, you can still learn some important financial lessons

Two-thirds, or 65%, of Canadians are entering 2015 feeling confident they will achieve their financial goals, an 11% drop from last year.

The poll highlights a stark change in trend. From 2011 through to 2014 the number of Canadians who expected to reach their financial goals grew, though slightly, each year. However, for 2015, confidence has dropped 11%.

The CIBC poll breaks down Canadian confidence into several categories, including age.

Confidence from those in the youngest group, ages 18-24 stands at 62%, just shy of the national average.

Also, 75% of Canadians aged 25-34 said they are confident they will reach their financial goals, relatively unchanged from last year (76%).

Canadians aged 35-44 are still as comfortable that they can meet their financial goals as last year: 72% of Canadians in this age group feel confident.

Canadians aged 45-54 were among the least confident they will reach their financial goals: 58 per cent feel optimistic, a significant drom from 77% last year.

Canadians aged 55-64 are not feeling more confident than they did last year either: 61% feel confident they will reach their financial goals, down from 74 per cent last year.

The most significant drop in confidence comes from the group closest to retirement: 60% of Canadians 65 and older feel confident they will reach their financial goals, a tumble of nearly 20% from last year.

“We are seeing a real conflict among Canadians close to retirement, who are trying to balance their short-term need to reduce debt with the longer-term goal to save for the retirement they want,” says Christina Kramer, executive vice-president, Retail and Business Banking, CIBC.

“As Canadians approach traditional retirement age it can be a challenge to keep focused on both, and that can impact their overall confidence in their future finances.”

One explanation for the dip in confidence is that Canadians may be concerned by recent volatility.

“People fear what happened in 2008-2009. Recurring volatility has woken those fears,” says Christopher Dewdney, financial security advisor at DWL Financial Services Inc.

The drop in confidence may be a result of recent stock market variability, including major dropoffs in the energy sector.

Nielsen’s telephone survey of 1,014 Canadians, conducted for CIBC, took place the week of Nov. 13-17, 2014.

Major financial events late last year may have also had an impact on the confidence of Canadians.

Some 37,000 public sector jobs were cut the same month this poll was conducted.

On Oct. 22, the Bank of Canada warned about a hot housing market, and would eventually go on to say, in December, that the housing market was possibly overvalued to the tune of 30%. Homeowners who have bet on interest rates staying low, or who have variable-rate mortgages, may be worrying about the future of their major asset.

 

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