WATERLOO, ON, May 9 /CNW/ - More than four out of 10 Canadian homeowners
aged 30-39 expect to be debt-free by the end of their forties and
another third expect to be debt-free in their fifties, according to
Manulife Bank of Canada's quarterly Debt Freedom Survey. The reality,
though, is that only seven per cent of homeowners aged 40-49 and 16 per
cent aged 50-59 have actually paid off all their debts.
"When people buy their first home, they have the best of intentions to
pay off their mortgage and other loans, and are optimistic about their
financial future," said Doug Conick, President and CEO of Manulife Bank
of Canada. "However, even carefully laid financial plans can be thrown
off track by unexpected life expenses, such as home repairs, family
illness, or job loss. Debt-freedom is possible, but it requires a
commitment to financial discipline, and for many people, some
professional advice on how to plan finances for the long term."
The reality is that paying off a large debt such as a mortgage requires
a series of smaller decisions over a lifetime, and people often use
their extra cash for things other than debt repayment, even when they
know they should pay down that loan. When respondents were asked what
they would do with an unexpected windfall, they identified debt
repayment as a priority by a significant margin - an average of 51% of
the hypothetical windfall was allocated to debt repayment. But when
respondents were asked what they actually did with the money the last
time they were in that situation, debt repayment remained the top
priority, but the amount allocated to debt dropped to 39%, while money
allocated to day-to-day expenses rose significantly.
The average homeowner aged 30-39 has $209,200 in debt of all kinds
according to the latest quarterly survey results. By comparison, those
in their fifties still have $108,500 of debt on average, or just over
half as much. The survey data shows that 19 per cent of homeowners in
their fifties actually increased their debt in the past 12 months,
while only 33 per cent reduced their debt by as much as or more than
they had expected. In fact, 20 per cent of homeowners aged 50-59
either couldn't foresee when they would be debt free, or don't expect
to ever reach that point, while 44 per cent expect to carry debt into
their sixties. Nonetheless, homeowners in their fifties are happier
with the amount of debt they currently have than those in their
thirties and forties, reflecting perhaps both the progress they have
made in reducing their debt, and their perceived ability to repay that
Overall, 57 per cent of respondents report reducing their debt over the
last 12 month, up 8 points from 49 per cent in November 2010.
Additionally, nearly 7 in 10 respondents rank being debt-free among
their top financial priorities, a relatively consistent finding over
the past five quarterly surveys.
Other findings from the survey:
71 per cent of those in their 50s manage their debt and day-to-day
finances with no outside advice, compared with 63 per cent for the
40-49 age group and 57 per cent for the 30-39 group
A third of respondents believe their knowledge of personal debt
management to be "above" or "well-above average", compared with just 10
per cent who characterize their knowledge as "below average" or
Those 30-39 have 3.8 separate loans outstanding, compared with 3.1 for
those in their 40s, and 2.7 for the 50-59-year-olds.
Among common financial priorities, all groups expressed the lowest level
of satisfaction with their level of debt and the highest level of
satisfaction with their ability to manage day-to-day expenses.
More detail on these and other data, including a breakout of responses
by age category, can be found at manulifebank.ca/debtresearch.
The Manulife Bank of Canada poll surveyed 1,000 Canadian homeowners
between ages 30 to 59 with household income of more than $50,000. It
was conducted online by Research House between March 22 and April 4,
About Manulife Bank
Established in 1993, Manulife Bank was the first federally regulated
bank opened by an insurance company in Canada. It is a Schedule l
federally chartered bank and a wholly-owned subsidiary of Manulife
Financial. As Canada's first advisor-based bank, it has successfully
grown to more than $18 billion in assets and serves clients across
Manulife Bank believes that effective debt management is a key
contributor to financial health and that, by working with a Financial
Advisor to create a customized financial plan that incorporates debt
and cash flow management, many people could save money, become
debt-free sooner and achieve more of their financial goals.
It's for this reason that Manulife Bank offers its innovative deposit
and loan products through independent financial advisors to help
individuals make the most of their financial plan. Manulife Bank
employs a team of specialists across the country that work with
homeowners and financial advisors to design cash flow programs that are
more effective, efficient and flexible.
For more information about Manulife Bank products, speak to your
financial advisor or visit manulifebank.ca. To learn more about Manulife One or find your local Manulife Bank
specialist ask your advisor for a referral or visit manulifeone.ca.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group
operating in 22 countries and territories worldwide. For more than 120
years, clients worldwide have looked to Manulife for strong, reliable,
trustworthy and forward-thinking solutions for their most significant
financial decisions. Our international network of employees, agents
and distribution partners offers financial protection and wealth
management products and services to millions of clients around the
world. We provide asset management services to institutional customers
worldwide as well as reinsurance solutions, specializing in life and
property and casualty retrocession. Funds under management by Manulife
Financial and its subsidiaries were $478 billion (US$492 billion) as at
March 31, 2011. The Company operates as Manulife Financial in Canada
and Asia and primarily as John Hancock in the United States. Manulife
Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and
under '945' on the SEHK. Manulife Financial can be found on the
Internet at www.manulife.com.
SOURCE Manulife Financial
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