Most Canadians Don’t Save Enough: Survey
A survey from the Canadian Payroll Association found that most Canadians don’t believe that they’ve saved enough money for retirement. According to the survey of working Canadians, three-quarters of those surveyed say that they’ve saved less than 25 percent of the money they feel they’ll need in retirement.
More than one-in-five said that they will need to work at least four years more than they had originally planned, primarily due to a lack of savings.
About 47% of those surveyed said that they put less than 5% of their paycheque toward savings. Most financial experts suggest putting aside at least 10% of your paycheque for savings.
More employees (71% compared to an average of 66% over the past three years) say that they are trying to save more, but only 62% are able to do so successfully. This is down from an average of 66% over the last three years.
The survey also found that almost half of those surveyed say they are living paycheque-to-paycheque and that they would find it difficult to meet their financial obligations if their paycheque was delayed by one week.
Overall, the survey found that many people do not have enough money saved to cope with emergencies. About 24% surveyed stated that it is unlikely that they could come up with $2000 within the next month if an emergency occurred. Of those surveyed, 12 percent doubted that they would ever be debt free and 36 percent said that they feel overwhelmed by their debt. The number of Canadians who say that their debt has increased from last year is 30%.
When it comes to type of debt, 25% of those surveyed stated that they have a mortgage on their primary residence. This is the number one type of debt identified. The second most frequent type of debt is credit card debt, with 19% of Canadians stating that they owe money on their credit cards. About 17% have a car loan and 16% have a line of credit. Only 7% of Canadian stated that they do not have any debt.
The Trouble with Debt
When you have a large amount of debt and little savings, you are not prepared if there is an emergency situation. If you are living paycheque-to-paycheque now, getting an unexpected bill for a car or home repair, getting sick and needing to pay for care or losing your job will make it impossible to pay your bills as they become due. This can cause you to take out more debt in order to keep on top of your bills and financial obligations.
However, if you already have debt or if you need to take out a lot of debt in order to handle the emergency situation, it becomes very difficult to afford the cost of repaying this debt. After all, if all of your paycheque went towards living expenses and debt repayment BEFORE the emergency, you probably won’t have anything left over to cover the increased costs associated with paying down more debt.
A situation like this one can leave you unable to handle your financial commitments as they become due.
Reducing or Eliminating your Debt
If you are in a situation where you cannot pay your bills as they become due, you could benefit from speaking with a licensed trustee in bankruptcy. While the name may sound scary to some, don’t worry, speaking with a trustee does not mean that you will end up filing for bankruptcy. In fact, a trustee can help you understand the options that are available to you that could help you reduce or eliminate your debt.
Most trustees offer a free consultation where they will review your financial situation. After this review, they can let you know the options that you have that will help you improve your financial situation. Trustees are able to administer bankruptcy and consumer proposal processes. However, they won’t just provide you with the details of the services that they can help you with. They will give you information on all possible options. It is then your decision as to how you would like to proceed.
Handling debt can be difficult. However, it’s important to know that there are options out there. Rather than become overwhelmed by your debt, speaking with a financial professional can help put you in a position where you can improve and rebuild your financial life.