Saving for retirement isn’t a top priority for Canadians, according to a CIBC poll, which also offers insight that potentially explains why.
When asked about financial priorities heading into the new year, only 6% of poll respondents cited saving for retirement. In fact, saving for a vacation was slightly more popular among respondents (7%).
Instead, the No. 1 financial priority was paying down debt, cited by 26% of respondents, and the potential culprit keeping Canadians from focusing on savings.
While paying down debt tops the list of priorities for the ninth consecutive year, it might be particularly significant this year: almost one-third of respondents (29%) say they’ve taken on more debt in the past year to cover such things as daily expenses, new cars or home renovations. The top sources of debt are credit cards (45% of respondents), mortgages (31%), car loans (23%), lines of credit (22%) and personal loans (11%).
On a positive note, more than a quarter of Canadians say they have no debt (28%); however, that doesn’t necessarily translate to increased saving and investing. Only 12% of survey respondents said growing wealth was a financial priority. Further, 63% worry that the extended bull run is coming to a close — a perception that might tempt them to unwisely pull back on savings and buckle down on debt.
“There’s rarely enough money to do everything, so it’s critical to make the most of the money you earn by prioritizing both sides of your balance sheet — not debt or savings, but both,” says Jamie Golombek, managing director, tax and estate planning, with CIBC Financial Planning and Advice, in a release.
While being debt-free might help clients sleep better at night in the short term, says Golombek, it may cost more in the long run when missed savings and tax-sheltered growth are considered.
In addition to having client discussions about saving for retirement, advisors might want to address other issues weighing on clients’ minds. The poll finds that Canadians are most concerned in 2019 about inflation (64%), a low loonie (34%) and rising rates (31%).