Oct 25: BEST FROM THE BLOGOSPHERE
October 25, 2021
Will pandemic debts impact Canadians’ retirement plans?
New research from the Canadian Institute of Actuaries (CIA, and no, not that CIA) suggests that many Canadians worry that debt taken on during the pandemic will delay – or indefinitely postpone – their plans for retirement.
The research, carried out by Ipsos Public Affairs, is covered in a recent story in the Toronto Sun.
The research found that “with Canadians earning less” during the pandemic, “increases in debt followed suit,” the newspaper reports, quoting another media outlet, Blacklock’s Reporter.
“The report reveals 25 per cent of respondents took on additional debt due to the pandemic with higher percentages seen among students and self-employed Canadians, both at 33 per cent. Also exposed were those who rent, 34 per cent,” the article notes.
How much did incomes drop during the pandemic?
According to the Sun story, citing the research, one third of the 1,529 people questioned by Ipsos reported a pandemic-related income drop. A further 69 per cent say “COVID has changed their retirement timelines.”
While the average retirement age, according to Statistics Canada, is 65, the research found that 40 per cent of those surveyed “do not know when they will retire, and a further 14 per cent state they do not expect to ever retire,” the Sun reports. Four per cent of those surveyed said they expect they will have to work beyond age 71, the article adds.
The article points out that the large percentage of “don’t know” answers to when retirement will occur “reflects the fact some Canadians are not engaged in work outside the home.” The largest segment of those polled saying they didn’t know when they would retire are “students (65 per cent), homemakers (69 per cent) and those who are disabled (62 per cent),” the article notes.
The article concludes by indicating that CIA estimates the average Canadian needs $900,000 worth of savings to retire by age 65.
These conclusions are interesting, particularly since other research has found that some Canadians have been saving like crazy during the pandemic, due to having less things they can spend their money on.
The Globe and Mail reports that “Canada’s stockpile of savings earlier this year was $280 billion bigger than before the pandemic,” citing research from RBC Economics.
It’s not known, the article adds, what Canadians plan to do with this cash stockpile. Retirement savings is not mentioned specifically as a destination for this cash, at least in this article.
So, some of us are having to borrow to make ends meet, while others are sitting on a pile of cash.
Those with extra cash should take note of the struggles of those without it. The folks that are pushing retirement into the future are doing so because (we can assume) they are carrying too much debt and thus not putting as much away for retirement as they would like. These folks will have to get back into retirement saving when they can, but understandably they can’t do much at this point.
If you are sitting on cash, consider putting at least some of it away for retirement. This is especially important if you don’t have a retirement savings plan at your place of work. Folks in this situation have to rely on themselves to fund their future retirement income.
Don’t have a plan at work? Consider the Saskatchewan Pension Plan, a “made in Saskatchewan success story” that has been helping people save for retirement for 35 years. SPP can take your hard-earned savings and invest them for you in a low-cast, professional way. Better, when it’s time to finally exit the stressful world of work, SPP can turn your invested savings into a stream of income. Check them out today!
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.