The skyrocketing cost of living has created increased need for employees to receive additional financial well-being information to meet their retirement savings goals.
It’s increasingly difficult for most Canadians to put aside any savings above their monthly expenses, thanks in large part to the squeeze from high inflation and the effects of increased interest rates impacting their wallets. Indeed, the financial troubles employees are experiencing can also be seen through credit card spending, which can cause severe long-term consequences if not properly managed.
Credit card debt jumped to $113.4 billion in the third quarter of 2023, thanks in part to six million new cards being granted over the past 12 months, according to an Equifax Canada credit trends report. The average credit card balance increased to $4,119 in the quarter, representing a 9.9 per cent year-over-year increase. And a report from NerdWallet found that 40 per cent of people with credit card debt believe it will take them six months or longer to pay it off, while 11 per cent don’t know how much time they’ll need. These current financial challenges could delay retirement plans for many employees.
Since I joined Benefits Canada, it has been encouraging to see that many employers are already providing tools to help employees with financial planning, including interactive video series and engaging programs to lunch and learn sessions. It’s clear, now more than ever, that the need for financial literacy campaigns is growing.
However, for these efforts to work, employees need to be honest about their own financial reality. It’s easy to succumb to doubt and wonder, “Will people judge me if they know I don’t have a registered retirement savings plan or a tax-free savings account?” or, “Is anyone going to think badly of me if I say how much debt I’m carrying at the moment?” These are understandably difficult questions to navigate.
A great starting point for employers looking to dispel the stigma surrounding financial well-being conversations is the annual Financial Literacy Month campaign that takes place each November. The national program, which aims to help build financial resilience in an increasingly digital world, has created a bigger push for a conversation around the financial pressures that everyone is carrying. Some aspects of the national campaign are designed to be aspirational — and this is where employers can step in to provide a more personalized or regularly scheduled dialogue with employees.
A recent survey from H&R Block Canada Inc. found more than half (52 per cent) of Canadians feel unprepared for retirement. The reality is that many are already considering delaying their preferred retirement age or taking on part-time gigs in retirement. Sadly, many employees don’t believe they’ll be able to retire at any point. The survey also found just 37 per cent of Canadians said they have an employer-sponsored pension plan.
Thanks to the efforts of employers, more and more workers should be able to take a step back and spend some time reviewing what it will take for them to retire. While the picture may look gloomy at first, it’s more important to simply get started taking more meaningful steps towards financial well-being.