Despite some signs of economic improvement over the past year, most employed Canadians are no better off when it comes to their retirement prospects, according to the Canadian Payroll Association’s ninth annual survey released today.
Forty-two per cent of survey respondents said they save five per cent or less of their earnings, below the 10 per cent savings level generally recommended by financial planning experts, says the association.
Will have to work longer
Almost half of working Canadians say they will now have to work longer than they planned five years ago, and the top reason cited is they are “not saving enough”.
“This is corroborated by another result indicating that 74 per cent have saved only a quarter or less of what they feel they will need to retire. And even among those closer to retirement (50 and older), a disturbing 47 per cent are still less than a quarter of the way to their retirement savings goal,” says the study.
Paycheque to paycheque
The survey also found that about half of Canadians live paycheque to paycheque. Forty-seven per cent of working Canadians report it would be difficult to meet their financial obligations if their pay cheque was delayed by just one week.
Meanwhile, 41 per cent of employees spend all of or more than their net pay. The top reason given for increased spending is higher living costs. Almost one quarter of employees said they could not come up with just $2,000 within a month for an emergency expense.
High debt levels
The survey found that debt levels of working Canadians remain high with over one-third of working Canadians feeling overwhelmed by their level of debt. Meanwhile, those who believe it will take more than 10 years to pay down their debt has risen to 42 per cent versus 36 per cent in 2016. Twelve per cent of those surveyed believe they will never be debt free.
Ninety-four per cent of survey respondents carry debt, with the most common debt being mortgages (28 per cent), credit cards (17 per cent), car loans (18 per cent) and lines of credit (17 per cent).
Mortgages most difficult to pay down
“Not surprisingly, given the high cost of real-estate in some areas, more respondents than ever find mortgages on principal residences the most difficult debt to pay down, with 32 per cent of respondents selecting this option. For the first time in the survey’s nine year history, mortgages surpassed credit card debt (23 per cent) as the most difficult to pay down,” says the Canadian Payroll Association.