Canadian seniors ages 65 and older are more likely than their younger compatriots to give themselves a high mark for financial knowledge.
So reports BMO Financial Group in its third annual “Financial Literacy Report Card.” Conducted in October by the Canadian market research firm Pollara, the survey polled 1,215 Canadians.
The study shows that 55 percent of Canadian seniors would give themselves an “A” or “B” when evaluating their knowledge of key financial products, programs and terms. This is 10 percent higher than the Canadian average.
“It’s encouraging that seniors are feeling confident about their level of knowledge on personal finance issues,” says Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group. “However, Canadians of all ages need to appreciate that improving one’s financial literacy is a life-long pursuit. The money issues you face today can change every time you enter a new phase of your life.”
According to a recent report issued by the BMO Wealth Institute, “Mind Your Taxes in Retirement,” a significant number of Canadian boomers (those aged 45-plus) lack knowledge of key personal finance topics that can impact their income during retirement.
The report notes that only a small percentage of Canadian boomers know how best to maximize their tax savings, leaving them vulnerable to having benefits and credits, such as Old Age Security (OAS) and the Age Amount tax credit, clawed back. For example:
- Seventy-nine percent of Canadians aged 45-plus either answered incorrectly or did not know how dividend income and capital gains are treated from a tax perspective;
- More than one-third (34 percent) either answered incorrectly or did not know how interest income is treated from a tax perspective;
- Forty-one percent did not understand the tax implications of making a withdrawal from a Registered Retirement Income Fund (RRIF), a Canadian tax-deferred retirement plan.