Wanting instant gratification is not all that uncommon. Who can blame someone for wanting whatever they want right away? Having to work for years in order to afford something can be a very tedious hardship. But, hey that’s life, right? We can’t all have what we want immediately.
This doesn’t seem to matter to most Canadians, however. According to a recent Bank of Montreal study, people in Canada prefer to spend their money on things that provide them with satisfaction right away. As QMI Agency’s Sharon Singleton reports today, cars and vacations are a lot more popular choices than putting away money for retirement.
She writes that the BMO poll focused on the reasoning behind why so many Canadians are not thinking seriously about saving for their retirement yeas. The field of research, known as “behavioural finance”, looks at that growing trend of people not following what is considered logical economic patterns.
The BMO study found that what people feel about saving and retiring and what they actually put into practice are two different things. According to the survey, 90 per cent of those polled said that they believe that saving for retirement should begin early. Meanwhile, 40 per cent of respondents admitted to not financially preparing themselves to leave the workforce.
In fact, over 80 per cent of those who were surveyed revealed that they are not saving for retirement as they are more concerned with satisfying their current needs. Tina Di Vito, who is the head of the BMO Retirement Institute, had this to say about the study’s findings: “We’re not practicing what we preach. We place a higher value on the immediate reward than putting aside rewards for the future.”
Singleton notes that this recent study is certainly not the first to show that Canadians are not saving enough money for their retirement years. BMO listed a number of factors as to why this is the case. The reasons are both psychological and behavioural.
Writes Singleton: “One factor was an over-abundance of information. When faced with too much choice, consumers tended not to choose at all, with more than one- third of respondents saying they were overwhelmed by the number of products on the market.”
BMO suggest taking small steps at a time when approaching retirement planning. Creating a strict budget to control spending as well as signing up for pension plans are other suggestions.
Added Di Vito: “You should set small objectives, rather than having aspirations looking out over a 20 to 30 year time horizon. That’s much more effective to get people to take on a plan and stick to it.”