Canadians get a failing grade on retirement planning
When it comes to preparing for retirement, Canadians are receiving a failing grade. According to the third annual survey of employees conducted by the Canadian Payroll Association, 40 per cent of Canadians say they now expect to retire later than they previously planned. The primary reason (cited by 40 per cent) was "I'm not saving enough money for retirement."
Wendy McLean-Cobban, communications manager at The Canadian Payroll Association in Toronto, shares the good, the bad and the ugly regarding Canadians' retirement reality.
The good: We know
what it takes to retire comfortably.
Most Canadians do understand what they could be doing to improve their financial situation and meet their retirement goals. Ranked in order of importance, the CPA's survey 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).
"Canadians do understand what they need to do, they're just not doing it," laments McLean-Cobban.
The bad: We can't
seem to agree.
Sixty-nine per cent of Canadians said their first or second priority if they were to win $1 million from a lottery would be to pay off debt. Other priorities included contributing as much as possible towards retirement, sharing it with family members and investing.
Yet McLean-Cobban says such spending attitudes differ from one generation to the next. "One of the generational differences is if people won the lottery, they would do slightly different things with the money," says McLean-Cobban, adding that the younger generation would be more likely to purchase a home while older folks would be willing to share their winnings.
The ugly: We're
barely making ends meet.
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.
"It's still concerning that, even after 3 years, 57 per cent of Canadians still say they would be in financial difficulty if their pay cheque was even delayed by even a week. Things really haven't improved," says McLean-Cobban, noting that financial planners recommend that people have approximately three months of expenses (rent, mortgage, bills, groceries) as an emergency savings fund.
Statistics aside, McLean-Cobban says a payroll professional can help Canadians better prepare for their golden years. "One of the things payroll professionals can do is help employees set up different accounts that their pay cheque can go into," says McLean-Cobban. "For example, they can set up a separate savings account and have part of a pay cheque go right to a savings account. And many employers offer group registered retirement savings programs while others offer to match contributions, which is like free money. If you're not taking advantage of these offerings, you're missing out."
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