5 strategies to boost retirement savings

What are a few of the biggest affordability obstacles?

• Personal Debt – Personal debt is up. Almost four-in-10 Canadians (38 percent) have non-mortgage debt over $20,000. Another area of concern is the rise in credit card debt. This year we found that more people are carrying balances on their credit cards (57 percent vs 53 percent in 2018).
• Higher living costs – Many people are struggling to afford the basics, like groceries, utilities, transportation and housing. Unfortunately, affordability challenges are linked with growing debt and inadequate retirement savings. Almost a third (31 percent) say their debt loads are growing because they don’t earn enough income, and the vast majority of Canadians (73 percent) agree that the cost of living is so high that they can’t afford to put money aside.
• Raising a family – Families with children are more likely to struggle with affordability than households without kids. Childcare costs can weigh heavily on financial obligations like trying to balance mortgage loans with other debt repayments. This year our poll results show that households with kids are even more concerned about having enough money for retirement: 86 percent believe they will need to work longer than their parents’ generation, an increase of 9 percent over last year.

Who is affected most?

 
If saving for retirement is a financial challenge for most Canadians, there are some groups that are struggling more than others.

• Lower income households – When 50 percent of lower income individuals struggle to pay for essential utilities and 65 percent are carrying credit card debt, retirement savings are often an afterthought.
• Gen Xers – This is a particularly vulnerable demographic because they will be the next to retire. Four-in-10 Gen Xers (38 percent) admit they have no retirement savings. Almost half (47 percent) say they can’t afford to save for retirement because of rising living costs.
• Women – Women continue to experience more difficulty in paying for necessities like food, housing, transportation, utilities and clothing than men do. The majority of women (59 percent) are living paycheque-to-paycheque and over four-in-10 (43 percent) admit to having no retirement savings.

What can you do to start saving for retirement?

 
Hanging on to debt is the number one reason why people are struggling to save for retirement. If your debt is keeping you from making regular contributions to your retirement savings, here are some steps you can take to alleviate that stress and get back on track:

1. Calculate your debts. First, keep calm and tally up your debts. It can be intimidating to see all your debt obligations on paper, but this is a necessary first step toward taking control. Use this debt calculator to make the task easier. Go over your debts with your spouse or a trusted family member so you can make a plan.
2. Prioritize your debts. Starting with your highest interest debts, determine a monthly payment plan that will help you make a big dent in your balances. You might choose the debt snowball method which involves paying all extra money toward your highest interest debt until it’s paid, while paying the minimum on all other debts.
3. Creating a budget. It's best to start saving early and having a budget is a necessary tool for tracking spending and creating savings opportunities. This may not be easy or even possible for some, but expense trimming is one of the best ways people can start making progress in the retirement savings. Remember that budgets are living documents. If your bills or income have changed recently, it’s time to update your budget to reflect that. And, if your budget is tight, look for areas that can be trimmed, even temporarily.
4. Downsizing and more expense trimming. Preparing for retirement often means getting rid of the things you don’t really need and reassessing the expenses you had when you were earning a regular paycheque. These decisions will vary from household to household, but may include selling your possessions, downsizing your home, moving somewhere cheaper, selling your vehicle and reassessing how you are helping adult children.
5. Talk to a professional. Don’t let shame or embarrassment stand in your way. If you’re having trouble making progress because of an unmanageable debt load, it’s worthwhile to speak with a Licensed Insolvency Trustee who can explain available debt solutions based on your situation. You can even review some of your options beforehand using this repayment options calculator.

 
Our poll shows that affordability challenges are an ongoing problem when it comes to retirement planning. Rising costs of living, stagnate incomes and growing debt levels have left Canadians feeling financially stuck, focused on making ends meet and unable to save for their retirement goals. When looking for answers, it helps to know that debt is one of the most fixable problems people face. Knowing exactly what options you have at your disposal can help free up much needed income and help you get back on track with your savings goals. 

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