Canadians see themselves debt-free two years sooner than a previous study
TORONTO, June 9, 2014 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) poll conducted by Nielsen finds that on average, Canadians currently holding some form of debt expect to be debt-free by the age of 53 - two years sooner than a similar poll conducted in 2011, despite a steady climb of consumer debt levels during that time. The poll also revealed that for Canadians currently aged 55-64, more than two-thirds are still carrying debt, emphasizing the need to take action to make those debt-free dreams a reality.
Key findings of the poll include:
- 53 is the average age that Canadians currently holding debt expect to be debt-free, lower than the average age of 55 from a similar CIBC poll in 2011
- However, among Canadians aged 55-64, 67 per cent say they currently hold debt, an increase from 64 per cent in 2011
- The top types of debt currently held by 55-64 year olds include: lines of credit (40 per cent); mortgages (32 per cent); credit cards (29 per cent); car loans (25 per cent)
"Canadians have good intentions when it comes to paying down debt, but unless they have a solid financial plan in place they may still find themselves with significant debt obligations as they near retirement," said Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC. "Taking a realistic look at your current level of debt and your plan to pay it back is a critical step towards reaching your financial goals and ensuring that you are not being overly optimistic about when you'll be completely debt-free."
When it comes to debt, DIY isn't for everyone
The poll also shows that while some Canadians with debt are trying to lighten their debt loads, they are not likely to be talking about their goal to be debt-free with an advisor:
- 46 per cent have made sacrifices or cut spending in order to better manage debt
- 41 per cent have implemented a household budget
- 40 per cent have made at least one lump sum payment towards their debt, on top of regular payments
However, only 16 per cent have talked to a financial advisor about managing their debt better, and 25 per cent say they have not taken any action at all to accelerate debt repayment.
Annual CIBC research on financial priorities shows debt repayment has been the number one priority for Canadians four years in a row. However, the current poll suggests that despite their efforts, Canadians may not be making significant progress against that goal, pointing to the need for getting advice as an important first step in tackling their debt.
"These results show that few Canadians are meeting with an advisor and having a conversation about how to reduce their debt," said Ms. Kramer. "Trying to do-it-yourself can work for some people, but most Canadians would benefit from sitting down with an advisor who can look at their personal situation, and help them work out a realistic plan on how they can reduce their debt while building their savings."
Some Canadians are achieving their goal to be debt-free
The poll also revealed some good news for those aiming to pay off their debt in their 50s - 33 per cent of Canadians aged 55-64 are currently debt-free. "Being debt free is possible if you take action to pay down what you owe, limit the amount of new debt you take on, and stick to your financial plan," noted Ms. Kramer.
Advice for focusing on reducing debt
- Talk to an Advisor - Most Canadians don't think about making debt reduction the topic of a conversation with an advisor, but it can help you make progress on paying down debt by looking at your overall financial picture and putting realistic steps in place to reduce interest costs and accelerate debt repayment.
- Spending Alerts - Services such as CIBC CreditSmart® can help you stick to your budget. Free to CIBC credit card holders, CIBC CreditSmart® allows clients to set a budget limit on each spending category on their credit card, and be notified by phone, email or online message when they exceed their customized budget.
- Stick to your plan - Once you have a plan in place, stick to it. If you fall off track, get back to your plan as soon as possible and keep making progress towards your goal.
KEY POLL FINDINGS
Average age Canadians expect to be debt-free, by region:
|Manitoba and Saskatchewan||53||56|
Percentage of Canadians who currently have debt, by age group:
Each week, Nielsen interviews approximately 1,000 Canadians through teleVox, the company's national telephone omnibus survey. These results were gathered from a sample of 2,050 Canadians between May 1 and 12, 2014. A sample of this size has a margin of error of +/-2.16%, 19 times out of 20.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.
For further information:
Caroline Van Hasselt, Director, External Communications, 416-784-6699 or [email protected]