By Sheryl Smolkin
For many working Canadians and for those in Saskatchewan, the road to a comfortable retirement is becoming longer and more difficult. A large portion of the working population is living pay cheque to pay cheque, unable to save, and worried about their local economy, according to the Canadian Payroll Association’s recently released eighth annual Research Survey of Employed Canadians
The survey reveals that only 36% of working Canadians and 37% of those in Saskatchewan expect the economy in their city or town to improve in the coming year.
Many working Canadians are cash-strapped and barely making ends meet. Nationally, and in Saskatchewan, almost half (48%) report it would be difficult to meet their financial obligations if their pay cheque was delayed by even a single week.
“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy and are fearful of rising interest rates, inflation, and costs of living,” says Patrick Culhane, the Canadian Payroll Association’s President and CEO. “In this time of uncertainty, people need to take control of their finances by saving more. ‘Paying yourself first’ (by automatically directing at least 10% of net pay into a separate savings account or retirement plan) enables employees to exercise some control over their financial future.”
Incomes flat, saving capacity drained by spending and debt
“Survey data suggests that household income growth has stalled, as respondents reporting household income above $100K has hardly increased in five years,” says Alec Milne, Principal at research provider Framework Partners. “In fact, real incomes have actually declined when inflation is taken into account.”
While pay has remained largely unchanged, employees’ spending and debt levels have affected their ability to save. Nationally, and in Saskatchewan, 40% of employees say they spend all of or more than their net pay
Despite employees’ challenging financial situations, only 28% of respondents across the country cite higher wages as a top priority. Instead, an overwhelming 48% nationally, are most interested in better work-life balance and a healthy work environment. In Saskatchewan only 25% prioritize higher wages, while 45% are most interested in better work-life balance and a healthy work environment.
“Clearly, many Canadians are concerned about their financial situation,” says Lucy Zambon, the Canadian Payroll Association’s Board Chair. “But better work-life balance does not have to mean reduced financial security if you spend within your means.”
Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, an increase from the three-year average of 36%. Debt levels have risen over the past year for 31% of respondents. In Saskatchewan, 35% feel overwhelmed by debt and 35% say their debt level has increased this year. Unfortunately, 11% nationally and 9% in Saskatchewan (among the lowest nationwide) do not think they will ever be debt free.
Similar to prior years, 93% of respondents nationally carry debt (96% in Saskatchewan). Over half of respondents nationally (58%) said that debt and the economy are the biggest impediments to saving for retirement.
Retirement savings fall short, retirement pushed back
Half of Canadians and 59% of Saskatchewan respondents think they will need a retirement nest-egg of at least $1 million.
Unable to save adequately, the vast majority of working Canadians have fallen far behind their retirement goals, with 76% nationally and 74% in Saskatchewan saying they have saved only one-quarter or less of what they feel they will need.
Nearly one-half of employees nationally (45%) now expect they’ll have to work longer than they had originally planned five years ago, primarily because they have not saved enough. Nationally, respondents’ average target retirement has risen to 62, whereas these same respondents’ target retirement age five years ago was 60, before reality set in.
Saskatchewan Pension Plan makes retirement savings easy
The Saskatchewan Pension Plan makes saving for retirement easy by offering all Canadians between the ages of 18 and 71 a flexible series of contribution options that can be modified at any time. Plan members can contribute up to $2,500/year:
- Directly from their bank account or credit card using the PAC system on the 1st or 15th of the month using a semi-monthly, monthly, semiannual, or annual schedule.
- Using VISA® or MasterCard® online at SaskPension.com or by calling toll free, 1-800-667-7153.
- At financial institutions, in branch or online
- By mailing directly to the SPP office in Kindersley
Members can also transfer up to $10,000/year from another RRSP into their SPP account.