While retirement should be the time for people to kick back and live the rest of their years worry-free, a new national survey suggests challenges in shaking a major financial burden.
According to the Sun Life Financial Barometer, 25% of Canadian retirees are living with debt. That includes 20% of baby-boomer retirees still making mortgage payments, while 26% still have car payments to contend with. The other debt items were:
- Unpaid credit cards (66%);
- Unpaid health expenses (7%)
- Money owed on holiday expenses or vacation property (7%); and
- Pending payments on home renovations (6%)
Overall, retired Canadians were found to have $11,204 in non-mortgage debt on average, with 25% not making efforts to pay it off monthly.
“From credit card debt to a mortgage, retirees are faced with a list of expenses in life after work,” said Sun Life Financial Canada President Jacques Goulet. “We recognize that managing finances can be overwhelming, particularly for those who are no longer working.”
Working Canadians also seem to be setting themselves up for debt pain down the road. The survey found 24% of Canadians dipping into their retirement savings. Among those who pulled cash prematurely from their nest eggs:
- 63% did so because they needed to (e.g., to pay for health expenses or repay debt);
- 24% did as part of the First Time Home Buyers’ Plan; and
- 13% wanted to (e.g., for vacations or car purchases)
The average amount of non-mortgage debt for working Canadians was $18,660. Those polled said they expected to retire at age 64 on average. However, some still expect to be working at age 66; among those respondents, 51% will do so by choice, while 49% will because they need to.
“Our survey results highlight the importance of getting ready for retirement," said Tom Reid, senior vice-president for Group Retirement Services, Sun Life Financial Canada. "Although it can seem far away, retirement creeps up faster than you think; building a financial plan and making meaningful contributions will pay off in the long run.”
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