Employees in Atlantic Canada fare worst on most fronts, including living pay cheque to pay cheque, debt burden, low savings and economic pessimism
HALIFAX, Sept. 7, 2016 /CNW/ - For many Canadians, especially in Atlantic Canada, the road to a comfortable retirement is becoming longer and more difficult. A large portion of the working population is living pay cheque to pay cheque, unable to save, and worried about their local economy, according to the eighth annual Research Survey of Employed Canadians, released today by the Canadian Payroll Association ahead of National Payroll Week. The survey reveals that only 36% nationally and 23% in the Atlantic region expect the economy in their city or town to improve in the coming year.
More Atlantic Canadians living pay cheque to pay cheque
Many working Canadians are cash strapped and barely making ends meet. Nationally, almost half (48%) report it would be difficult to meet their financial obligations if their pay cheque was delayed by even a single week. Nearly one-quarter (24%) say they likely could not come up with $2,000 if an emergency arose within the next month. In Atlantic Canada, 59% live pay cheque to pay cheque and one-third (33%) would find it tough to come up with $2,000 for an emergency (more than anywhere else in 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 nationally, as respondents reporting household income above $100K has hardly increased in 5 years," says Alec Milne, Principal at research provider Framework Partners. "In fact, real incomes have actually declined on a national basis when inflation is taken into account."
While pay has remained largely unchanged, employees' spending and debt levels have affected their ability to save. Nationally, 40% of employees, and 53% in Atlantic Canada, say they spend all or more than their net pay. Nearly half nationally (47%) and almost two thirds in Atlantic region (61%) are able to save just 5% or less of their earnings.
Despite employees' challenging financial situations, only 28% of respondents nationally (30% in Atlantic Canada) cite higher wages as a top priority. Instead, an overwhelming 48% nationally (and 46% in Atlantic Canada) 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."
More Atlantic Canadians feeling overwhelmed by debt
Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, up from the three-year average of 36%. Debt levels have increased over the past year for 31% of respondents. In Atlantic Canada, over half (53%) feel overwhelmed by debt and 36% say their debt level has increased this year. Unfortunately, 11% nationally and 14% in Atlantic Canada do not think they will ever be debt-free.
Similar to prior years, 93% of respondents nationally, and 98% of Atlantic Canadians carry debt. 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 46% of Atlantic respondents think they will need a retirement nest-egg of at least $1 million, and 75% nationally (80% in Atlantic) project that they will not be able to retire until at least age 60.
Unable to save adequately, the vast majority of working Canadians have fallen far behind their retirement goals, with 76% nationally and 77% in Atlantic saying they have saved only one-quarter or less of what they will need when they exit the workforce.
Nearly half of employees nationally (45%) and over one-third of employees in Atlantic Canada (36%) now expect they will have to work longer than they had originally planned five years ago, primarily because they have not saved enough. Nationally, 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, 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.
Regional and national survey findings are available. Go to www.payroll.ca → Media Room for news releases and infographics.
Canadian Payroll Association spokespersons are available across Canada for interviews.
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.
SOURCE Canadian Payroll Association
Image with caption: "The Canadian Payroll Association’s (CPA's) eighth annual National Payroll Week (NPW) Research Survey shows that Canadian employees continue to live pay cheque to pay cheque, are struggling to save for retirement, feel overwhelmed by debt and are increasingly worried about their local economy. For more survey results, visit the NPW website at npw-snp.ca or the CPA's website at payroll.ca. (CNW Group/Canadian Payroll Association)". Image available at: http://photos.newswire.ca/images/download/20160907_C4242_PHOTO_EN_765899.jpg