Canadians are continuing to live paycheque to paycheque and are not saving enough, causing many to delay their retirement for several years, a survey finds.
The Canadian Payroll Association survey reveals that the vast majority of employees are nowhere near reaching their retirement savings goals, and more than one-third (35%) expect to work longer than they had originally planned five years ago, with their average target retirement age rising from 58 to 63 over that period.
Nearly one-quarter (21%) say they’ll now need to work an additional four years or more. “I am not saving enough money” was the top reason for delayed retirement, cited by 35% of respondents.
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Three-quarters of working Canadians (76%) say they have put aside less than a quarter of what they will need in retirement (up from an average of 74% over the past three years).
And even among those closer to retirement (50 and older), a disturbing 48% are still less than a quarter of the way to their retirement savings goal.
Not only are employed Canadians finding it difficult to save for their retirement, many think they’ll need a big nest egg. Half think they will need more than $1 million in savings when they exit the workforce, consistent with the average over the past three years.
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Many employees do not expect their financial situation to get better any time soon. Just one-third (33%) expect the economy to improve over the next year (down from an average of 41% over the past three years), while 27% feel the economy will worsen, up 10% from the three-year average of 17%.
A large proportion (48%) report it would be difficult to meet their financial obligations if their paycheque was delayed by a single week (about the same as the average of 47% over the past three years).
The provinces/regions with the highest percentage of employees living paycheque to paycheque are: Ontario (52%), British Columbia (51%), and Atlantic Canada (50%).
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Illustrating just how strapped some employees are, 24% report that they probably could not come up with $2,000 if an emergency arose within the next month.
While more employees say they are trying to save more (71% now, up from an average of 66% over the previous three years), fewer are actually able to do so, with 62% succeeding in their savings efforts (down from an average of 66% over the past three years).
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And their savings levels continue to be meagre. About half (47%) are putting away just 5% or less of their pay. Financial planning experts generally recommend a retirement savings rate of at least 10% of net pay.
Over one-third of working Canadians feel overwhelmed by their level of debt (36% versus 35% over the past three years), and 12% of employees say they are not sure they’ll ever be debt free.
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