Golden Years Postponed

CPA survey finds many Canadians living pay cheque to pay cheque, unable to save, faced with the prospect of working longer before retirement

TORONTO, Sept. 8, 2011 /CNW/ - For many Canadians, the 'golden years' are now a more distant dream. They are struggling to save for retirement and to make ends meet.

According to the third annual survey of employees conducted by the Canadian Payroll Association (CPA), 40% of Canadians said they now expect to retire later than they previously planned. The primary reason (cited by 40%) was "I'm not saving enough money for retirement."

Living pay cheque to pay cheque

A major contributing factor to the low savings rate is that many Canadians are living close to the line. The CPA survey found that the majority of Canadian workers continue to live pay cheque to pay cheque, with 57% saying they would be in financial difficulty if their pay was delayed by even a week.

The numbers were even higher for younger Canadians aged 18 to 34 (63%) and single parents (74%). The regions with the highest percentage of workers living pay cheque to pay cheque were Ontario (60%) and the Atlantic provinces (64%), which may be the result of their slower recovery since the last recession.

Financial planners generally recommend that people have approximately three months of expenses (rent, mortgage, bills, groceries, etc.) as an emergency fund.

Failing to save for retirement

Almost three-quarters of employees (74%) said they have saved less than a quarter of their retirement savings goal. "This is particularly troubling when you realize that 71% of the respondents are over the age of 35, with the bulk in their main saving years between 35 and 54," states Dianne Winsor, CPM, Chairman of the CPA.

Another significant finding - half (50%) of employees across the country reported that they are saving 5% or less of their net pay. This is well below the 10% of net pay that financial planning experts generally recommend as a retirement savings rate.

While 60% said they are trying to be better savers, more than half of these individuals reported that they have been unable to do so. The remaining 40% of Canadians said they were not even trying to save more.

West Coast (55%) and Prairie (53%) workers have been marginally better at saving; whereas single parents (71%) and single individuals (65%) have stated they have not been able to save as much.

Patrick Culhane, CPA President & CEO, noted that payroll professionals can often help employees administer a savings plan. This may include the employee directing a portion of their net pay to a separate savings account and/or into a Registered Retirement Savings Program (which reduces one's income tax and is especially attractive if the employer matches contributions).

"Develop a savings plan, and then talk to your payroll professional about how you can administer it effectively through payroll," Culhane urged.

How much do employees feel they'll need to live comfortably in retirement?

Almost two-thirds (63%) felt that they would need more than $750,000. Younger people 18 to 34 are concerned they will need to save more to retire.

How much
money do you
think you'll
need to retire?
Employees 18
to 34
Employees 34
to 54
Employees 55
to 64
over 65
$250,000 or less 4% 2% 4% 9% 17%
$250,001 to $500,000 16% 11% 15% 22% 8%
$500,001 to $750,000 17% 16% 18% 18% 33%
$750,001 to $1,000,000 25% 24% 26% 25% 17%
$1,000,001 to $3,000,000 27% 30% 29% 19% 25%
$3,000,001 to $5,000,000 7% 11% 5% 4% 0%
Over $5,000,000 4% 6% 3% 2% 0%

What could they do to improve their financial situation?

Most Canadians do understand what they could be doing to improve their financial situation and meet their retirement goals. Ranked in order of importance, respondents thought they should be spending less (32%), paying off credit card debt (22%), reducing their mortgage (19%) and contributing more to their retirement savings (14%).

Both younger workers and Canadians on the West Coast want to spend less (18-34 - 38%; West Coast - 39%), while the group most concerned about paying off their credit card debt was the 18 to 34 year olds (26%).

Dreaming of winning a million dollars…

Sixty-nine percent (69%) of Canadians said their first or second priority if they were to win $1 million from a lottery would be to pay off their debt (with the highest ranking from Atlantic workers (78%) and 35 to 54 year olds at 74%). Other priorities included contributing as much as possible towards retirement, sharing it with family members, and investing.

Not surprisingly, there were other differences between the generations on how they would spend their lottery winnings - from younger workers who would buy their first home to older employees who would share their winnings with their families.

Survey Reponses:

Between July 6 and August 2, 2011, 2,070 employees responded to this online survey open using a convenience sampling methodology. Respondents to the survey were recruited by members of the CPA with whom they work to get responses from employed Canadians. This Canadian Payroll Association developed survey was conducted by Framework Partners, a market research and strategic planning firm. The survey is consistent with a margin of error of plus or minus 2.2% 19 times out 20, but as a non-probabilistic methodology was used a definitive margin of error cannot be expressed. 

About the CPA:

Payroll professionals in 1.5 million organizations across Canada are responsible for ensuring the timely and accurate payment of $810 billion in wages and taxable benefits, $250 billion in statutory remittances to the federal and provincial governments, and $90 billion in health and retirement premiums, while complying with more than 191 regulatory requirements. The Canadian Payroll Association (CPA) has influenced the payroll compliance practices and processes of hundreds of thousands of employers since 1978. As the authoritative source of Canadian payroll knowledge, the CPA affects the legislative processes and practices of payroll service and software providers, as well as hundreds of thousands of small, medium and large employers.

National Payroll Week (September 12 - 16) recognizes the accomplishments of payroll professionals and the CPA by building greater awareness of the size and scope of payroll and its impact on employers, employees and government across Canada.

Visit, under Media Room, News Releases, for further information, including a summary of the findings from the 2011 CPA NPW Employee Survey.

SOURCE Canadian Payroll Association

For further information:

To book an interview, contact:

Wendy McLean-Cobban, CMP, ABC
Manager, Communications
The Canadian Payroll Association
416-487-3380 / 1-800-387-4693 ext. 111

Robert Stephens



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