Not necessarily a personal choice
When it comes to saving for retirement, it’s recommended to save 10 per cent of your after-tax income from the day that you start working full time. If you do this, you should have enough money to retire at the age of 65.
A new report finds that a growing number of Canadian seniors are working longer, retiring with debt, and don’t have access to work place pensions. A national survey was commissioned by Financial Planning Standards Council (FPSC) and Credit Canada. It spoke to 1,000 seniors over the age of 60, and asked them about their personal finance issues.
In Canada, 20 per cent of Canadian residents are still working past the age of 60. Of great concern are the six per cent who are 80 years of age, or older. More than 30 per cent said that they had to work longer, because they couldn’t afford to retire. One in eight said that they had too much debt, and had to keep working to pay it off. Another 30 per cent said that they didn’t have enough savings. Some 12 per cent said that they couldn’t stop working, because they were still financially supporting their children.
More and more seniors are feeling financially insecure as they get closer to retirement.
Debt, debt and more debt
Out of those who were surveyed, 26 per cent said that they were in debt as they approached their retirement. Credit card debt lead the way at 32 per cent, followed by lines of credit (23 per cent), mortgage debt (19 per cent) and auto loans (14 per cent). Of those seniors who were over the age of 80, 24 per cent were carrying credit card debt, and nine per cent were carrying a car loan.
More Canadians are coming up to retirement with no workplace pension whatsoever, and even fewer have the coveted defined benefit plan that gives them a guaranteed pension throughout their retirement. Of those surveyed by the FPSC, 50 per cent of seniors, over the age of 80, listed a company pension plan as a source of income. Only 41 per cent of younger seniors (60 to 69) had a workplace pension.
More and more seniors are feeling financially insecure as they get closer to retirement, and more than half of those surveyed said that they had at least one financial concern. One in four are worried that they will run out of money before they die, and the same percentage are worried about the cost of long-term care. On top of this, many are worried that they won’t be able to manage their debt, and that they will have to sell their home or rely on their children, in order to make ends meet.
Take advantage of all the government benefits that are due to you, if you’re in a lower income bracket. Make sure that your annual tax return is tax efficient, so that you’re paid the maximum benefits possible. If you’re still living in the home where you raised children, downsizing will allow you to take advantage of the equity that you’ve built up, so that you can invest it wisely for your retirement. If worried about your finances, you can still get on a financial track that will be helpful to your personal situation.
Rubina Ahmed-Haq is a journalist, personal finance expert and HPG’s finance editor. She appears on CBC TV and radio, CTV Your Morning, Global Toronto, and writes for ratesupermarket.ca. Follow her @alwayssavemoney. AlwaysSaveMoney.ca