A stress-free retirement might be a thing of the past


A “stress-free retirement” might be a thing of the past, according to a brand-new Sun Life Financial survey, which discovers that a quarter of retired Canadian are in debt in their golden years.

About 25 percent of the 750 Canadians polled in between the ages of 55 to 80 years for the Sun Life Financial Barometer stated they have financial obligation that varies from home mortgages to car payments.

These Canadians were either totally or partially retired when they were surveyed in October as part of an online poll that included 2,900 people in between the ages of 20 to 80 years.

” From credit card debt to a home mortgage, retired people are faced with a list of expenses in life after work,” stated Jacques Goulet, president, Sun Life Financial Canada, when the findings were released this week.

” We recognize that managing financial resources can be overwhelming, especially for those who are no longer working.”.

Of those in debt, about one in five were still making mortgage payments, while 66 per cent had overdue charge card.

Type of debt.

Here’s a take a look at the other types of debt those retired were carrying:.

  • 26 percent were making automobile payments.
  • Seven per cent had unpaid health costs.
  • Seven percent owed loan on holiday expenses or vacation home.
  • Six per cent had not paid off home renovations.

Retired Canadians typically had $11,204 in non-mortgage debt, according to the study..

However among those that were still working, nearly 30 per cent stated they continued to work since they need to.

Tom Reid of group retirement services at Sun Life Financial stated retiring Canadians are carrying financial obligation more frequently than they have in the past.

People are actually poorer than they think, but they whistle past the graveyard because their bank is telling them that they’re richer than they think.– John Degoey , iA Securities

“One in four aren’t settling their monthly costs,” he stated. “Although it can seem far away, retirement creeps up faster than you believe.”

Retirement specialist Malcolm Hamilton of C.D. Howe Institute stated that even though 20 per cent of the retired respondents were still making a home loan payment, it does not necessarily imply they have a monetary problem.

” Without knowing more about the size of their financial obligations relative to their properties and the size of their debt payments relative to their earnings, it is impossible to say whether elders are experiencing monetary hardship,” he said.

Retirement savings

The study likewise found that a quarter of working Canadians, those aged 20 to 64, were dipping into their retirement cost savings.

Because they said they needed to pay for things such as health expenditures and other financial obligation, about 63 per cent were doing so.

The findings resemble a survey released last week by the Bank of Montreal that showed about 40 per cent of Canadians withdrew cash from their RRSPs.

Toronto-based financial advisor and Industrial Alliance Securities portfolio manager John De Goey said he was not amazed by the outcomes of the study and believes the findings are reasonably precise.

” It suggests that a large percentage of the population either doesn’t consider retirement much or doesn’t think of it at all,” he said.

” Even a great proportion of those who know the need to conserve fail to appropriately measure just how much they’ll need.”

He said the majority of financial organizers are using return presumptions for retirement funds that are “unreasonably” high..

” A few individuals wind up conserving too much as in more than required, however the majority fail,” he stated, mentioning that expected returns from pension will be lower than they have been in the past as individuals live longer.

Living longer.

Participants of the study retired at an average age of 59, but life expectancy in Canada is continuing to sneak greater.

The typical life expectancy in Canada is currently age 84 for guys and age 87 for women.

De Goey mentions that Canadians get the most loan in retirement if they wait till age 70 to begin drawing from the Canada Pension Plan (CPP), as long as you live to be about 82 years or older.

” The bulk of Canadians live to be more than 82, yet just an extremely small portion of Canadians wait until age 70 to start taking their CPP privileges,” he stated.

He added that Canadians may having difficulty preparing for retirement, due to the fact that they are receiving mixed messages about it.

” We have chartered banks running ads that say you’re richer than you believe. Oftentimes, that’s the specific opposite of what reality shows,” he said.

” Now we have a double-whammy. People are actually poorer than they think, however they whistle past the graveyard due to the fact that their bank is informing them that they’re richer than they think.”.

Hamilton of C.D. Howe pointed out that most studies have actually found fairly little difference in between the standard of living of working Canadians compared to those who are retired.

” This suggests that Canadians have actually done a much better job getting ready for retirement than anyone gives them credit for,” he stated.

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