Survey finds many Canadians now faced with the prospect of working longer before retirement
By Contributor
For many people, the ‘golden years’ are now a more distant dream. They are struggling to save for retirement and to make ends meet.
According to the third annual survey of employees conducted by the Canadian Payroll Association (CPA), 40 per cent of Canadians said they’ll likely have to retire later than they previously planned.
The region with the highest percentage of workers expecting they’ll have to postpone retirement was Ontario (43 per cent).
The primary reason (cited by 40 per cent of Canadians) was “I’m not saving enough money for retirement.”
Living pay cheque to pay cheque
A major contributing factor to the low savings rate is that many Canadians are living close to the line.
The CPA survey found that the majority of Canadian workers continue to live pay cheque to pay cheque, with 57 per cent saying they would be in financial difficulty if their pay was delayed by even a week.
The regions with the highest percentage of workers living pay cheque to pay cheque were the Atlantic provinces (64 per cent) and Ontario (60 per cent), followed by the Prairies (56 per cent) and the West Coast (53 per cent).
Financial planners generally recommend that people have approximately three months of expenses (rent, mortgage, bills, groceries, etc.) as an emergency fund.
Failing to save for retirement
Almost three-quarters of Canadian employees (74 per cent in Ontario) said they have saved less than a quarter of their retirement savings goal.
“This is particularly troubling when you realize that even the older age groups are not saving for their retirement,” states Dianne Winsor, CPM, Chairman of the CPA. “For example, more than 40 per cent of Canadian employees aged 55 to 65 are still less than a quarter of the way to their retirement savings goal.”
Another significant finding – 50 per cent of employees across the country (53 per cent in Ontario) reported that they are currently saving only five per cent or less of their net pay. This is well below the 10 per cent of net pay that financial planning experts generally recommend as a retirement savings rate.
Patrick Culhane, FCMA, CAE, CPA President noted that payroll professionals can often help employees administer a savings plan. This may include the employee directing a portion of their net pay to a separate savings account and/or into a Registered Retirement Savings Program.
“Develop a savings plan, and then talk to your payroll professional about how you can administer it effectively through payroll,” Culhane urged.
How much do employees feel they’ll need to live comfortably in retirement?
Almost two-thirds of Canadian workers (63%) felt that they would need more than $750,000.
What could they do to improve their financial situation?
Most Canadians do understand what they could be doing to improve their financial situation and meet their retirement goals.
Ranked in order of importance, respondents thought they should be spending less (32 per cent), paying off credit card debt (22 per cent), reducing their mortgage (19 per cent) and contributing more to their retirement savings (14 per cent).
Survey Reponses
2,070 employees responded to this online survey open between July 6, 2011 and August 2, 2011 using a convenience sampling methodology.
Respondents to the survey were recruited by members of the CPA with whom they work to get responses from employed Canadians.
This Canadian Payroll Association developed survey was conducted by Framework Partners, a market research and strategic planning firm.
The survey is consistent with a margin of error of plus or minus 2.2 per cent 19 times out 20, but as a non-probabilistic methodology was used a definitive margin of error cannot be expressed.
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