Ontario employees’ retirement goals challenged by debt and economy, payroll survey finds
For many working Canadians, including those in Ontario, the road to a comfortable retirement is becoming longer and more difficult. A large portion of the working population is living paycheck to paycheck, unable to save, and worried about their local economy, according to the Canadian Payroll Association’s eighth annual Research Survey of Employed Canadians, released today ahead of National Payroll Week. The survey reveals that only 37% of working Ontarians and 36% of Canadian employees, expect the economy in their city or town to improve in the coming year.
Almost half of working Ontarians living pay cheque to pay cheque
Many working Canadians are cash strapped and barely making ends meet. In Ontario, almost half (49%) report it would be difficult to meet their financial obligations if their paycheque was delayed by even a single week (48% nationally). Nationally, just 20% in Ontario and 24% nationally say they probably could not come up with $2,000 if an emergency arose within the next month, making Ontarians the least financially prepared for an emergency in all of Canada.
“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. According to the survey, 38% of employees in Ontario, and 40% nationally, say they spend all or more than their net pay.
Despite employees’ challenging financial situations, only 28% of respondents nationally (and in Ontario) cite higher wages as a top priority. Instead, an overwhelming 46% in Ontario, and 48% nationally, 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 and ‘Pay Yourself First’ as a step towards financial well-being.”
Ontario employees feeling overwhelmed by debt
Nearly one-half of working Ontarians (42%), and 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 32% of Ontario respondents and 31% of respondents nationally. Unfortunately, 11% nationally and in Ontario do not think they will ever be debt free.
Similar to prior years, 92% of Ontario respondents nationally carry debt (93% nationally). 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 55% of Ontario 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 in Ontario 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. Respondents’ average target retirement has risen to 62, whereas these same respondents’ target retirement age five years ago was 60.
How payroll can help
“Payroll professionals can arrange to automatically deduct a portion of an employee’s net pay each pay period and direct it into a separate savings or retirement account. These deductions come right off the top, making it easier to save,” Zambon explains.
To learn more about automatic savings – and how you can Pay Yourself First – talk to your payroll professional.
The Canadian Payroll Association’s Research Survey of Employed Canadians is conducted to mark National Payroll Week (September 12-16, 2016). For more information about National Payroll Week, and the mission-critical role of payroll professionals, visit npw-snp.ca.
Canadian Payroll Association spokespersons are available across Canada for interviews.
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Canadian Payroll Association Research Survey of Employed Canadians
A total of 5,629 employees from across Canada, and from a wide range of industry sectors, responded to an online research survey between Monday, June 27th, 2016 and Friday, August 5th, 2016, using a convenience sampling methodology. The survey was developed by the Canadian Payroll Association and conducted by Framework Partners. The survey is consistent with a margin of error of plus or minus 1.3% 19 times out of 20, but as a non-probabilistic methodology was used, a definitive margin of error cannot be expressed.
Payroll Professionals – Keeping Canada Paid
Canada’s 1.5 million employers rely on payroll practitioners to ensure the timely and accurate annual payment of $901 billion in wages, $305 billion in statutory remittances to the federal and provincial governments, and $163 billion in health and retirement benefits, while complying with more than 200 federal and provincial regulatory requirements. Since 1978, the Canadian Payroll Association has annually influenced the payroll compliance practices and processes of over five hundred thousand organizational payrolls. As the authoritative source of Canadian payroll knowledge, the Canadian Payroll Association promotes payroll compliance through education and advocacy.
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