Many Canadians are finding themselves in the red while living out their golden years. A new CIBC poll conducted by Harris/Decima found that nearly 60 percent of retired Canadians hold some form of employment, though it’s often less than working Canadians. On average, retired Canadians carry 1.65 debt products with a balance (including mortgages, lines of credit, loans and credit cards) compared to 2.64 products with a balance among non-retired Canadians.
Although retired Canadians hold less debt than those still working (76 percent), they are also less likely to be taking steps to accelerate their debt repayment.
“While retired Canadians carry less debt than the national average, their debt could be stagnant and may end up costing them more in interest costs over a longer period of time,” said Christina Kramer, Executive Vice President, Retail Distribution and Channel Strategy, CIBC. “You really have to think about the debt you are retiring with because the regular repayments you make will directly affect the discretionary income you have.”
Making the transition to retirement may mean adapting to living on a fixed income. In past CIBC research from the beginning of 2012, retired Canadians identified managing day-to-day expenses as their number one financial priority for this year.
Debt carried into retirement can affect retirement plans and cash flow, as the monthly payments must come from pension earnings or from retirement savings � both of which were intended to serve as retirement income.
“These poll results clearly illustrate the importance of having a good debt repayment strategy in all phases of life, particularly as you approach retirement” added Ms. Kramer. “While it’s a good sign to see that Canadians have made some progress on debt reduction entering retirement, it’s also clear that once you retire with debt, it can be harder to pay off your outstanding balances.”
|National Average||59% (retired Canadians)|
|National Average||27% (retired Canadians)|
|Line of Credit||29%|
Average age at which Canadians expect to retire:
National Average � Age 63
Atlantic Canada – Age 62
Quebec – Age 62
Ontario � Age 63
Manitoba/Saskatchewan � Age 63
Alberta � Age 62
BC � Age 64.