Canadians Prioritize Debt Repayment Despite Retirement Concerns

A longitudinal Edward Jones survey shows an upward trend of retirement fear amongst Canadians

MISSISSAUGA, ON, July 27, 2015 /CNW/ - A new Edward Jones survey reveals that most Canadians opt to pay off debt when granted a lump sum despite growing increasingly concerned about having to work longer to supplement retirement savings. Poll results show that nearly one-in-three Canadians planned to use their 2015 tax returns to pay down debt, while fewer than one-in-10 planned to use that money to save for retirement.

"It's a common dilemma for many Canadians—should I pay down my debt, including my mortgage, or contribute to my retirement savings account?" says Patrick French, director of financial and retirement planning with Edward Jones. "Unfortunately, there's no easy or definitive answer. When carefully factored into an overall financial strategy, a lump sum of money can mean an opportunity to pay off debt and also accumulate retirement savings, but Canadians need to strike the balance that is right for them."  

The survey also found that nearly as many say that they will use the money to take a trip (8%) as will set the money aside for their retirement (9.4%).

So while Canadians do not seem to be prioritizing retirement savings when they receive a lump sum, like a tax return, research commissioned by Edward Jones as part of a longer-term study reveals that Canadians are concerned about having to work into their golden years.

When asked to name their biggest fears, 34 per cent of Canadians say it is having to work longer to supplement their retirement savings, a figure that has increased from 28 per cent in 2010, when Canadians were last asked the question. This has been an upward trend—four years earlier, in 2006, only 23 per cent cited this as their biggest fear.

"This uptick doesn't surprise me," French says. "Over the past ten years, Canadians have experienced an economy that has gone through several changes, and for many, the fear of the unknown can seem quite overwhelming— which makes the value of solid financial advice and a long-term investment strategy more critical than ever."

Part of this fear may be due to the fact that the majority of Canadians polled—70 per cent— have not calculated what they'll need for retirement, which may help account for why Canadians at various ages share this fear. For example, 38 per cent of individuals aged 25-34 believe they will have to work longer to supplement their retirement savings.

"The younger generation has a distinct fear about working into retirement, and this is the same group that has the biggest opportunity to save," added French. "By mapping out a clear financial strategy, those in their 20's and 30's can establish well-defined goals and get themselves on a solid financial footing for retirement. My biggest piece of advice to this group is one key thing— do not squander your single biggest asset: time."

However, and perhaps more alarmingly, according to French, nearly a third (27%) of Canadians over 55 fear that they'll have to work longer to supplement their retirement savings.

"Being over 55 and starting to look 15-20 years ahead, it can really hit home that the possibility of maintaining a particular lifestyle will be difficult. The good news is that no matter your age, there are several options to help create a retirement income stream," says French. "I would strongly encourage Canadians in this age group to contact a financial advisor to help better understand their individual financial situation and create a personalized, strategic plan."

Data in this news release was gathered via an online survey of a representative sample of 1,130 Canadians between February 2 and February 5, 2015, and an online survey of a representative sample of 1,574 Canadians between May 25 and 28, 2015. A probability sample of the same size would yield a margin of error of +/- 2.9 per cent, 19 times out of 20 in the first sample, and a margin of error of +/- 2.5 per cent, 19 times out of 20 in the second.

About Edward Jones
Edward Jones is a full-service investment dealer with one of the largest branch networks in Canada. It is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, and a participating organization of the Toronto Stock Exchange. Including its affiliate, Edward Jones serves nearly 7 million individual investors in Canada and the U.S. from more than 11,000 locations.

Edward Jones is a limited partnership in Canada and is a wholly owned subsidiary of Edward D. Jones & Co., LP, a Missouri limited partnership. Edward D. Jones & Co., LP is a wholly owned subsidiary of The Jones Financial Companies, LLLP, a Missouri limited liability limited partnership.

SOURCE Edward Jones

For further information: including tips from a local financial advisor about what investors need to keep in mind when considering these topics, please contact: Nima Ranawana, [email protected], 416-969-2712