Canadians aren’t happy with their retirement prospects and savings, reveals a national survey by the Canadian Payroll Association. While survey responses paint a poor financial picture of Canadians, it’s up to advisors to help clients separate feelings from fact and take control of their finances.
For example, almost half of working Canadians (46%) say they’ll have to work longer than they planned to five years ago. Why? They say they’re not saving enough, reveals the survey.
Almost half of those surveyed (46%) think they need a retirement nest egg of at least $1 million. More Ontario residents set the bar at that amount, with 53% saying they need as much.
To reach financial security, more than a quarter of working Canadians (26%) say earning more is key, versus 19% who cite spending less.
Encouragingly, the survey finds a 5% increase in the number of employees with total household incomes of more than $125K, and a slight rise in full-time employment to 89% from 87%, compared to the previous survey.
Overwhelmed by debt
Further complicating retirement goals is Canadians’ debt levels. More than one-third (35%) of Canadians surveyed and 37% of Ontarians surveyed are overwhelmed by their debt. And nearly one-third (31%) of respondents nationally (32% in Ontario) say their debt loads increased over the year.
Similar to previous years’ surveys, 94% of Canadians say they carry debt. The most common debt types are mortgages (28%), credit cards (17%), car loans (18%) and lines of credit (17%).
Not surprisingly, given the high cost of real estate, more respondents than ever find mortgages on principal residences the most difficult debt to pay down (32%) — the first time that mortgages surpass credit card debt in the survey’s nine years.
The primary reason for increased debt is higher overall spending. The major reasons for increased spending are higher living expenses (32%) and unexpected expenses (25%).
Paycheque to paycheque
Indeed, survey respondents cite high living costs as the reason they spend all — or more than — their net pay ( 41% of employees nationally and 42% in Ontario spend all or more than their net pay).
That means savings suffer, with 42% of survey respondents (43% of Ontario employees) saying they save 5% or less of their earnings.
Illustrating just how strapped some employees are, 22% (both nationally and in Ontario) say they couldn’t come up with $2,000 within a month for an emergency expense.
In fact, the survey reveals 47% of working Canadians report they would struggle to meet financial obligations if their paycheques were delayed a week. In Ontario, 49% live paycheque to paycheque.
About the survey: A total of 4,766 employees from across Canada, and from a wide range of industry sectors, responded to an online research survey between June 27, 2017, and August 5, 2017, using a convenience sampling methodology.