Two reports released Monday continue to show the troubling state of personal finances in Canada.
Edward Jones released a new poll that revealed Canadians are banking on an inheritance to help them, as an overwhelming majority struggle to meet their financial goals. The data shows that 83 per cent of Canadians have not achieved their financial objectives.
And the annual BDO Canada Affordability Index, which examines how affordable life is in Canada, reveals that as Canadians struggle to make ends meet and manage growing debt, future financial plans, like retirement, are increasingly put on the backburner. Over half (53 per cent) of Canadians continue to live paycheque to paycheque and debt remains overwhelming for 25 per cent. Over a quarter (27 per cent) of Canadians still don’t have enough for their needs and less than half (42 per cent) have enough money to spend on their wants.
The Edward Jones survey listed the following factors are roadblocks to Canadians achieving their financial goals:
- cost of living (47 per cent);
- low income (39 per cent);
- unplanned financial obligations/overspending (19 per cent);
- and insurmountable debt (17 per cent).
The BDO Canada survey shows that more Canadians (57 per cent compared to 53 per cent in 2018) are carrying the burden of credit card debt and for 31 per cent, debt is increasing due to income constraints. This suggests that many Canadians will be forced to carry debt into their later years. Three in 10 Canadians have delayed paying off their credit card balances because they can’t afford it and four in 10 have a non-mortgage debt load of over $20,000, said the report.
“Affordability and debt challenges continue to weigh on Canadians, and what our affordability index reveals is that, over time, the cumulative effects have a significant impact on financial goals,” said Doug Jones, president of BDO Canada’s financial recovery services practice, in a news release.
The study also revealed that a growing number of Canadians are not well prepared for retirement, even those approaching their retirement years. More Canadians (39 per cent compared to 31 per cent in 2018) admit to having no retirement savings, including one third (32 per cent) of boomers and seniors.
“Meanwhile, the retirement outlook for Gen Xers (aged 35 to 54) is worsening. Among the almost four in 10 (38 per cent) Gen Xers who have no retirement savings (compared to 33 per cent in 2018), almost half (47 per cent) say they can’t afford to save for retirement, and 19 per cent say they need to pay debts off first,” said the report.