| | DECEMBER 2024MANAGEHRMAGAZINE.COM8By Corinne Rozon, Sr. Manager, Retirement, Cenovus EnergyIt's no secret that Canadians are having trouble saving for retirement. Look no further than your usual news sources, and you'll encounter the latest headline on the status of Canadians' financial well-being. Recently, the combination of higher-than-historic inflation and the challenge of making ends meet (e.g., shelter, groceries) is impacting future retirement savings. As a plan sponsor for 11 years and a practicing pension actuary before that, this made me pause.There is a fine balance between spending today to meet a certain standard of living versus investing in your future standard of living. But why is it so important to face this question, as difficult as it is?According to the Financial Consumer Agency of Canada's (FCA) website, starting retirement savings is never too early. Dig a little deeper; the impact of saving as much as you can, as early as you can, is staggering.For example, as per the FCA's website, if the target retirement savings goal is $100,000, you're earning an annual interest rate of 5% compounded on your savings, and you have 20 years to save; you need to put away about $250 per month. But if you defer saving and have only 10 years to grow your money, you need to save about $650 per month. The `lost' interest in this example is about $19,000, or around 20 percent of the savings goal. Now, retirement will require much more than $100,000. Assuming the savings target is $1 million, this would translate to $190,000 of lost interest, following the FCA's assumptions! So, we've established that getting started saving early is ideal. We also know employees are in the driver's seat with their savings, budgeting and expenditures. What role can plan sponsors play? Since pension and savings plans tend to be set up with a goal of enduring over a longer time horizon, this article shines a spotlight on a few plan design elements that may encourage consistent, long-term saving. Offering a variety of account types is a huge plus for HELPING YOUR EMPLOYEES SAVE In MyOpinionCorinne Rozon
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