For many Canadians, the ‘golden years’ could be a distant dream.
According to a survey by the Canadian Payroll Association (CPA), 40% of Canadians said they will have to retire later than they previously planned. The primary reason: They are not saving enough.
The survey found the majority of Canadian workers are living paycheque to paycheque, unable to save for the future. More than half (57%) of respondents said they would be in financial difficulty if their pay was delayed by one week, and almost three-quarters (74%) 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,” says Dianne Winsor, chairman of the CPA. “For example, more than 40% of Canadian employees aged 55 to 65 are still less than a quarter of the way to their retirement savings goal.”
Fifty percent of employees reported they are currently saving only 5% or less of their net pay. This is well below the 10% financial planning experts generally recommend as a retirement savings rate.
Most Canadians understand what they could do to improve their financial situation even if they’re not currently doing so. Ranked in order of importance, respondents thought they should be spending less (32%), paying off credit card debt (22%), reducing their mortgage (19%) and contributing more to their retirement savings (14%).