53% of Canadians live a paycheque-to-paycheque reality

A new survey shows how affordability issues impact people’s ability to handle debt and prepare for retirement

53% of Canadians live a paycheque-to-paycheque reality

BDO Canada has released the latest edition of its annual Affordability Index survey. Based on a poll of over 2,000 Canadians, it sheds light on how their continuing struggle to make ends meet affects their ability to manage debt and work toward long-term financial objectives.

According to the survey, which was conducted in partnership with BDO Canada, 53% of Canadians continue to live paycheque-to-paycheque, with 27% of all respondents not having enough for their needs and 58% having too little money to spend on their wants.

The impact on debt

The survey found hints that many Canadians face a debt burden that they will carry well into their later years. Struggling to keep up with the costs of daily living has led to credit card debt for 57% of respondents. Income constraints were cited by 31% of all respondents as a factor leading to increased debt. Furthermore, four in 10 Canadians admitted to having a non-mortgage debt load exceeding $20,000.

Affordability issues had an outsized effect on women, notably as a growing number report living paycheque to paycheque (59% vs. 54% in 2018). Over a quarter of women (28%) said they were overwhelmed by their debt load, and 43% said they have no retirement savings.

Read also: Most women are putting caring for others above retirement savings

From an age perspective, gen-X respondents — which together with baby boomers comprise the sandwich generation — were found to have the worst problem, with three quarters saying that they are facing debt. Within that cohort, 59% carry a credit card balance, 55% have a mortgage, and 44% said they were more than $20,000 in the red overall. Additionally, 23% said they were carrying between $20,000 and $40,000 in non-mortgage debt.

Worsening retirement prospects

That has contributed to a deteriorating retirement outlook for Gen Xers; 38% said they have no retirement savings, up from 33% in 2018. Nearly half (47%) said they can’t afford to save for retirement, and 19% cited the need to pay off their debt obligations as more urgent.

The retirement outlook is roughly the same for Canadians in general, with 39% saying they have no nest egg, including 32% of boomers and seniors. That has driven a consensus among an increasing number of retirees-to-be that younger generations will have to work longer than the one before them (82% vs. 75% in 2018). Furthermore, 69% of respondents overall are convinced that they won’t have enough money to get them through retirement even if they save.

When asking people to rate themselves based on their financial readiness to retire, the survey also found a majority self-assessment of “poor” or “terrible” among:

  • 56% of all respondents;
  • 60% of women;
  • 67% of millennials; and
  • 71% of lower-income individuals

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