Alberta employees’ retirement goals challenged by debt and economy, payroll survey finds
CALGARY (September 7, 2016) – For many working Canadians, and particularly for those in Alberta, 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 Canadian Payroll Association’s eighth annual Research Survey of Employed Canadians, released today ahead of National Payroll Week. The survey reveals that only 36% of working Canadians expect the economy in their city or town to improve in the coming year. Albertans still have a high degree of optimism regarding their local economy, with 45% believing their local economy will improve (among the highest in Canada).
Half of working Albertans 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. In Alberta, half (50%) live pay cheque to pay cheque.
“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, as respondents reporting household income above $100K has hardly increased in five years,” says Alec Milne, Principal at research-provider Framework Partners. “In fact, real incomes have actually declined 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, and42% in Alberta, say they spend all or more than their net pay.
Despite employees’ challenging financial situations, only 28% of respondents nationally (and in Alberta) cite higher wages as a top priority. Instead, an overwhelming 48% nationally, and in Alberta, 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.”
Alberta employees feeling overwhelmed by debt
Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, an increase from the three-year average of 36%. Debt levels have risen over the past year for 31% of respondents. In Alberta, 43% feel overwhelmed by debt and 33% say their debt level has increased this year. Unfortunately, 11% nationally and 10% in Alberta do not think they will ever be debt free.
Similar to prior years, 93% of respondents nationally carry debt (94% in Alberta). 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 62% of Alberta respondents think they will need a retirement nest-egg of at least $1 million (much higher than anywhere else in Canada).
Unable to save adequately, the vast majority of working Canadians have fallen far behind their retirement goals, with 76% nationally and in Alberta saying they have saved only one-quarter or less of what they feel they will need.
Nearly one-half of employees nationally (45%) now expect they’ll 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.
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