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BDO Affordability Index 2022

Canadians' financials take hit due to inflation and rising costs

TORONTO, SEPTEMBER 29, 2022A greater number of Canadians are finding it increasingly challenging to make nearly all types of purchases, according to the fifth annual BDO Affordability Index from BDO Debt Solutions. The survey, which examines the affordability and financial health of Canadians, found more than three-quarters of Canadians (78%) say their personal finances have worsened due to inflation, while just over half (54%) say they’re living paycheque to paycheque – an increase of three percentage points over 2021. Six in 10 Canadians are also either saving less, or not at all — especially for retirement — than they were in 2021.

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Retirement savings, discretionary spending plunge as more Canadians struggle to afford anything beyond essentials

The online survey of over 2,000 Canadians, conducted by the Angus Reid Group, found the rising cost of essential goods and services is the greatest contributing factor to increasing debt (84%), up 14% from 2021. And 42% say their debt has become overwhelming — almost double the levels seen in 2021.

While the majority of Canadians say they have enough money to buy the things they need, this number is lower than a year earlier (66% in 2022 vs. 70% in 2021.) Over one-third of Canadians (35%) say it’s challenging to feed themselves and their family, while 52% find it difficult to afford transportation. Discretionary spending has also taken a hit. Sixty-one per cent have cut spending on restaurants/take-out, along with travel (60%) and home electronics (53%).

Spending more on essentials means there is less money for savings and debt repayment. This is highest in Atlantic Canada where 91 per cent of respondents (78% nationally) indicated spending on groceries, rent or mortgage, and other essentials was the primary reason for saving less.

More than four in 10 Canadians have also cut savings for retirement, while 71% say saving for retirement is a challenge — an increase of six percentage points over 2021. As a result, 64% of Canadians now say they are not on track to save enough for retirement — a jump of four percentage points in the last year — of which nearly half say they are very far behind. Among those aged 18 to 24, more than two-thirds (67%) say they have no retirement savings at all. Overall, 32% of Canadians say they have no idea what their retirement plan will be, and one-third claim they will never stop working (through part-time/occasional work), despite wanting to retire.

Nancy Snedden portrait

“The findings from this year’s Affordability Index highlight the increasing proportion of Canadians who are struggling to keep up financially. With inflation and rising costs, affordability challenges have returned to, and in some cases, surpassed pre-pandemic levels. It’s concerning to see that Canadians are experiencing more financial difficulties today compared with the last three years.”

Nancy Snedden, National Leader of BDO Debt Solutions

"As Canadians continue to feel the squeeze on their financials, it's important they try to remain optimistic and not give up on looking for solutions, adds Snedden. "For those requiring support in overcoming debt challenges, there are always answers. You can speak to a Licensed Insolvency Trustee, who can help you look at the full picture and determine how to make the most impact on paying down debt."

BDO Debt Solutions has over 160 locations across Canada and over 60 Licensed Insolvency Trustees (LITs). BDO's LITs and debt professionals are committed to helping Canadians take control of their financial future and turn the page on debt. LITs are the only professionals that are licensed by the federal government to file consumer proposals or bankruptcies on behalf of individuals.

About the BDO Affordability Index

In partnership with BDO Canada, Angus Reid conducted the fifth annual online survey from August 5 to August 11, 2022, among a representative randomized sample of 2,008 Canadians age 18+ who are members of the Angus Reid Forum. For comparison purposes only, a probability sample of this size would yield a margin of error of +/- 2.2%, 19 times of out 20. Discrepancies in or between totals are due to rounding.

View BDO Affordability Index 2021

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