Perception vs. Reality: Confidence and Canada’s Retirement System
This research examines how confidence in one’s understanding of Canada’s retirement income system shapes actual retirement preparedness. Using data from a national survey of Canadians aged 35+, the authors find that overconfident individuals perceive themselves as prepared but are less likely to hold registered retirement savings. When they do, they accumulate substantially lower balances. Overconfidence also leads to inflated expectations of pension benefits and higher anticipated replacement rates, contributing to reduced private saving. Additionally, overconfident respondents overestimate inflation yet take fewer protective financial actions. Over time, they also learn less, while underconfident individuals improve their knowledge. These insights suggest that effective retirement guidance must address not only literacy gaps but also confidence calibration.