WATERLOO, ON, Nov. 19, 2013 /CNW/ - Only 51 per cent of homeowners are confident they will be debt-free at retirement, even though 83 per cent feel it's important to meet that goal by then, according to a new survey by Manulife Bank of Canada.
"If you're not confident that you'll reach your debt-freedom goal, whether it's by retirement or sooner, it's in your interest to seek out professional advice and put a personalized plan in place," says Doug Conick, President and Chief Executive Officer, Manulife Bank of Canada.
In a sign that a growing number of Canadians are concerned about rising household indebtedness, only 43 per cent of homeowners say they are happy with how they've managed their debt and day-to-day finances over the past year. That's down slightly from two years ago, when 46 per cent expressed satisfaction. Younger homeowners appear to be worst off, with fewer than four in 10 aged 30-39 indicating satisfaction with their debt management over the past year, compared to nearly five in 10 for those aged 50-59.
The survey also found that nearly one in three respondents are "very unhappy" with how they've managed their debt and day to day finances over the past year, up slightly from the third quarter of 2011. Consistent with past surveys, more than three quarters of homeowners rate debt-freedom as being among their top financial priorities.
"Debt is a tool that Canadians can use to improve their standard of living and purchase assets over the long-term," says Mr. Conick. "Still, people need a strategy to manage debt. The key is to determine what your financial priorities are - and then put a plan in place to focus on your most important goals."
When asked to indicate what strategies they use to manage their debt effectively, two-thirds of respondents say that they always pay their credit card balance in full - an increase of 9 per cent from two years ago. Among the third who carry a balance from time to time, a large majority intend to start paying their balance in full in the coming year. Interestingly, this finding is very similar to that from the 2011 survey - suggesting that good intentions may not always translate into action. Other commonly used strategies include "make extra payments on my debts" (61 per cent) and "create a written budget to track and manage my spending" (43 per cent). In each case, a quarter to a third of people indicated they don't use the strategy but plan to do so in the coming year.
Among the debt management strategies less frequently used - just one in three have consolidated their debt at a single low rate and fewer than one in four get debt management advice from a financial advisor. Interestingly, those who do get debt management advice from a financial advisor are more likely to take advantage of these strategies. In fact, 80 per cent of homeowners who work with an advisor pay their credit card balance in full each month, compared to 64 per cent of those who don't seek advice. Similarly, those who work with an advisor are more likely to make extra payments on their debts and create a written budget.
"For anyone who struggles to find time to spend on debt management or who could benefit from objective, professional advice - it's certainly worthwhile to seek out a financial advisor," says Mr. Conick. "It never hurts to learn about the strategies and tools that work for others - and getting personalized advice could help you remain focused on your goal of becoming debt-free."
About the Manulife Bank of Canada Debt Survey
The Manulife Bank of Canada poll surveyed 2,132 Canadian homeowners in all provinces between ages 30 to 59 with household income of more than $50,000. The survey was conducted online by Research House between September 10-20, 2013. National results were weighted by province and gender.
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 $22 billion in assets and serves clients across Canada.
About Manulife Financial
Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look 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. We also provide asset management services to institutional customers. Funds under management by Manulife Financial and its subsidiaries were C$574.6 billion (US$558.7 billion) as at September 30, 2013. 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 manulife.com.
SOURCE: Manulife Financial Corporation
For further information:
Sean B. Pasternak