Four in 10 Canadians retiring with debt: RBC

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Halifax couple Robin and Anne Lise Edwards have their home paid off and have money in the bank, but they have also borrowed money during their retirement.

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RBC Retirement Myths and Realities Poll 2010

CTV.ca News Staff

Date: Mon. Apr. 26 2010 9:17 PM ET

A new survey suggests many Canadians are entering their golden years in the red.

The survey from RBC finds that four in 10 Canadians over the age of 50 who have assets of at least $100,000 have retired with some form of debt.

As well, one-quarter have entered retirement still carrying a mortgage on their primary residence.

The survey, which RBC calls its first annual Retirement Myths and Realities poll, was conducted by Ipsos Reid to examine Canadians' expectations and experiences in retirement.

It also found that 17 per cent of retirees had consumer debt or credit card debt. In total 7 per cent had other kinds or debt or were co-signers on loans, while 5 per cent had mortgages on investment properties or cottages.

The survey found that 70 per cent of retirees feel it is still important to be able to save part of their income, yet more than one-quarter have acquired new credit products since they retired.

Lee Anne Davies, head of retirement strategies at RBC says that's not necessarily a bad thing.

"Having access to credit in retirement can be beneficial to managing income and cash flow and provide additional flexibility," she said in a news release.

Still, the survey found that many retirees are worried about how their savings will hold out over their retirement.

Inflation and taxes are among the top concerns, with more than one-third (35 per cent) worried that inflation will negatively impact their retirement income, compared to 43 per cent of pre-retirees.

As well, 62 per cent of retirees worry about taxes on their income, with two-thirds believing the percentage of their income required for taxes will rise in the next 10 years.

"It's not uncommon to be concerned about maintaining a sustainable level of income in retirement, but costs you never counted on may also arise," said Davies. "For example, our poll found that almost one-in-five retirees spend over $1,000 annually on prescription drugs."

The poll, conducted from March 10-19, 2010, surveyed online 2,143 adults aged 50 and over with household assets of at least $100,000. About half the group said they were retired.

The survey has an estimated margin of error of +/-2.1 percentage points 19 times out of 20.

Comments are now closed for this story

retdhairy
said

I guess I am more surprised 6 of 10 are retiring debt free!

Buddy boy
said

John and Joe you hit the nail right on the head, this is exactly what's wrong in Ontario right now. We seem to care more about immigrants than we do our own taxpaying people.

Rob
said

It's no surprise. I remember my father raising 5 kids, buying an acreage, having a hobby farm, travelling every other year, having a car payment, and putting us kids through private school. I do the same job as he did, and I have no kids, and can't afford an acreage, can't afford a car payment, we travel once every five years, we own a house in the city that's for sale because we can't afford it. Things have changed for the worse, that's for sure. I fully expect to have debt when I retire, and I have to plan on working until I can't physically do the job anymore (75-80).

David in Dartmouth
said

Retirement Nova Scotia style!!!...Guess what..??? For many years we received mail outs from the NDP (No Different Party) about how they would always protect and safeguard pensioners....!!! The promise of Tommy Douglas and the integrety of Stanley Knowles has been wholly betrayed by Darrel Dexter and his 40 thieves!!!! We retired 2 years ago having concluded a 23 year career with the Province of Nova Scotia. We paid a surcharge during those years on our pension remittances for indexing of our pensions and for a 2/3 benefit for our spouse if I pass on first....What did Darrel D do when he was elected....he shaved the survivor benefit from 66% to 60%.......capped indexing to 1.25% for 5 years then.....no indexing........no indexing for personal tax exemption......had seniors overpay in 2009 by $1.5 million.....and oh yeah....the Canada Pension Plan remittance that I had no choice in paying...gets confiscated at age 65 ANDDDDD.....to cap it all offff...he raises the HST from 13% to 15% ( The Feds giveth..the Province taketh)..... there are 3 words for these NDP....LIARS.....CHEATS....AND...THIEVES....!!!!! Please don't bother your asses to knock on our door for a vote....never again--ever!!!

Island Man
said

Portes...The action of this conservative governemnt went this way:Harper's promise to protect seniors savings in Income Trusts which led to 'safe haven' encouraging people to buy more.Betrayal of promise causing more harm than any other government tax change in CDN history.No thought to mitigating the damage, such as grandfathering existing trusts in order to protect existing seniors savings.It was an ill thought tax change by a man with no compassion for the people he has impacted.

Sue
said

In this news clip, they're saying that the next generation will not be receving any money from their parents.... Probably very true, but the majority of them got to enjoy a lot more perks than their parents with their own parents. Baby boomers have paid a lot more for their children's education and have had to help their children so much more. Maybe one of the reasons they are retiring with debt.....

Math Police
said

As well two in five don't reduce fractions.

St. Lambert
said

RBC cautions Canadians should be more careful with their money, so they can have access to credit during retirement. At the same time, they jack up their mortgage rates, because -- well, because they want more money.RBC likes to be seen as the knower of all things financial, tsk-tsk'ing Canadians with one finger, and reaching into their wallets with the other nine.

Adrian from Hamilton
said

I was lowly payed and have not worked too many years. I was involuntarily retired 8 years before I plan to - 8 years less going into my RRSP and other savings which have to stretch to cover 8 additional years. Luckily I never owned a car and the $10,000 saved annually is enough to survive on. CPP became my discretionary spending money. My main concern is the dramatic rise in food prices which does not count toward the core inflation numbers. So while the government says inflation is low/zero, my food bill keeps going up leaving me less to spend elsewhere.

Lisa
said

If we would get a decent increase in our pensions perhaps we would be debt free in our "golden years". There has been no increase in pension for a long time (forget the paltry $2.00 every so often), taxes are going through the roof, a number of drugs previously paid for are no longer covered. Glasses, hearing aids, teeth - all are expensive. If one of us dies the other one can't keep the house, even when it's paid for; and yes, we do carry life insurance. We still work part-time to offset these extra expenses. The pension needs to be adjusted upwards, it's not enough to live on even with no debts!

norm in ontario
said

I am in my mid 60's and am working harder and longer hrs than at any other time in my life. I see no retirement in sight. All I see is continuing to work so the gov't can keep spending like the well is bottomless. Soon, there will be 6 people left working in Ontario. What will McWimpy do then?

norm in ontario
said

why don't we send 500 million dollars to a country that REALLY needs our money, cause we don't

Justin
said

Who has any money anymore to live not to mention retire? We might all have to move to China to get our old jobs back and have a middle class dream. The American Dream is gone. Does a Chinese Dream of comparable attributes even exist?

Bob
said

Jon said it all .. as if taxes in Ontario were not bad enough we will soon be adding 8% to a lot more of lifes necessities .. like natural gas, hydro and water.For retired people living on fixed incomes these additioanal taxes are really going to hurt !

Marc - Toronto
said

Spend Spend Spend and when you run out of money the government will give you more.If you plan and save your money, the government will TAKE more.I ve frinds that lived high off the hog, they will down size their home to get more money and carry a big mortgage. They don't care the bank takes the home when they die. They pay no taxes because their income is so low.I on the other hand saved all my life. Now my OAS gets clwed back because I make too much.Lesson here folks. Keep spending. Society takes care of the poor and weak and punishes the responsible.

Things are not that simple
said

For posters who think all you have to do is budget and save % of income, consider just one scenario that will change everything. Leaky condo to the tune of starting your mortgage all over again right at the time you paid it off after years of commitment to being debt free and saving. How would you like to be forced back into huge debt due to some contractors poor workmanship? Pretty much wipes out a lifetime of "doing the right thing". So don't jump to conclusions before you have facts.

Joe Laval
said

I agree with Millicent Wendy's points on how corporations and political knuckle heads with their scam of globalization and spreading the wealth having basically given communist China our jobs and ruined our economy. Without good paying jobs we have less cash to pay the mortgage, rent, electric bills, groceries etc. After that and heavy taxation we have less disposable income for clothes and anything else we desire. The credit card becomes necessary and we have no choice but to buy "Made in China" as they have our good jobs and manufacture everything "now" and their lending finances the credit we use to buy their toxic, poor quality junk. They've even made sure that the product quality isn't as good as it was when "Made in Canada/USA" so now we have to buy more frequently to replace those same products. The economy of communist China booms at the cost of ruin for ours. They depend on us to keep their people working so they don't turn on the government and turn China into civil strife. The yuan manipulation is criminal and the World Trade Organization does nothing about it. China has a huge population that could float its own boat if they let their currency rise instead of fixing it to stay put. They need a middle-class of their own to make their domestic economy work and start importing our products without heavy tariffs slapped on them. Communist Chinese nationalism and manipulation of the world economy is destroying our retirement dreams and the media doesn't reveal this simple fact enough. Our politicians keep giving corporations our tax dollars as they snub their noses at us and our jobs to China. We're soon going to end up "communist" as China becomes who we used to be. Wake up people!

victoria in victoria
said

Actually the percentages of retirees with debt seem low given myself and my husband as examples. We are 50 and 52 and through various circumstances we have ended up semi-retired and no longer in our much more lucrative former careers. Our cash flow currently is somewhat less than it will be when we are fully retired because I'm not able to collect my defined benefit pension from my former employer until I'm 55. While we are not drowning in debt we do still have a mortgage for approximately 55% of the current market value of our condo and carry a balance on our low interest line of credit. We will do our best because we're responsible people but we are unlikely to pay off everything we owe including our mortgage before we both fully retire in approximately 10 years. We've run all the numbers including having some debt, accounting for inflation and interest rate increases and we're still going to be fine when we are fully retired. Debt does not always equal doom. If you are retired and you keep your debt at a level that is manageable on your guaranteed income you'll be fine so keep things in perspective. As for the name calling aganist those of us with debts... you know nothing about us or why we still have debt so don't imagine you've earned the right to judge.

Carl
said

@James: I understand that some (very few) people actually have unfortunate incidents through no fault of their own that leave them impoverished and unable to recover before retirement. In such cases, the first line of defence should be the person's family. There are also government programs (OAS, GIS, CPP) that will provide a subsistence level of income. But beyond that subsistence level of income, income redistribution programs create more problems than they solve by creating disincentives to save for one's own retirement.

CLS
said

My mother inlaw lived in a home in her late years due to a stroke. She had a good pension coming in, which they took it all. when she needed a wheel chair they made the father inlaw buy her one because he has company pension coming in. Guy down the hall did not save a cent had a great time traveling living the high life. when he needed a wheel chair the Goverment of Ont bought him one. now that will really encourage a person to save for retirement ??

Xian
said

I just think that if the gov't can support me than I would be happy. I think Ignatief would help everyone with this and make there be more support for all Canadians.

James
said

Carl, What would you say to those that worked as hard as you did, and were as fiscally responsible as you were, and who through no fault of there own don't have the money necessary? Make no mistake, there are plenty of people that could have done better, but there are several that did the best they good and still fell short.

Millicent Wendy
said

What do they expect when our political and corporate elites have been complicit in shipping our middle-class jobs and economy overseas to communist China? The deck was stacked against the North American middle-class by allowing communist China to not only take our jobs and ruin our economy but add insult to injury by putting us into debt by "dumping" loads of consumer goods into Wal-Marts and conditioning people to become "shop-a-holics" by low prices. Normally you used to go into a store for a purpose of buying what you need. Now you go into a Wal-Mart with sales, sales , sales and it becomes necessary to use a credit-card because you've over shopped taking advantage of "sale" items. Adding insult to injury is not only that communist China has your mid-class job..now they also finance the credit you use to purchase their products. Communist China is a cheater in the economy manipulating the yuan to outpace the rest of the world and at the ruination of the rest of the world's economic health. We have to clamp down on Communist China and reverse this destructive trend. North America and Europe had better take heed of the situation or sink further. Communist China must stop leeching off of us and build their own domestic economy and let us rebuild ours. They've got enough population to use their own to prosper and should leave ours alone. There's no excuse for it!

Portes
said

Island ManI am retired, I don't have a great pension, but I make it work. Don't blame the government, if the Liberals were in power they would have done the same thing. It is called grabbing money for more and more taxes

John in Halifax
said

What's "retirement" mean!?

Carl
said

Every one of us can make the choices that lead to a secure retirement: save instead of consuming every penny you make; shift your investments from market-traded assets to interest-bearing assets as you near retirement; don't retire early if you can't afford it. I was born to a soldier a stay-at-home mom with four kids. I worked my way through university in the 90s and graduated debt-free. I have no employer pension plan. I have had some hard financial times, but I will have a secure retirement because I have worked my a** off for it. Why should I have to give my money through the tax system to those who have not worked as hard or planned as well?

Gord. Robson, Nova Scotia
said

Some of us put away some money for retirement but became ill while trying to put this money away.Retirement money was used to pay the mortgage and medication BEFORE retirement . Now some of us only have Our Canada pension and GIS. We tryed but All governments let US down.

Brenda
said

It is sad to say but when I retire there is no doubt that I'm going to be in debt as with all the taxes the government is dishing out all the time, there is no way retirement will be debt free for me. You can't do anything today without being taxed to death and look at the price of gas and groceries. There is no reason for the price of gas to be so high as the government said, back when the gas was almost $1.50 a litre, that when the cost of crude goes up the gas goes up by a cent for every dollar crude went up. Why then, when crude is between 70-80 dollars a barrel, is gas so high? Could it be because the government is lining their pockets and know we have to get to work one way or another so why not gouge taxpayers to death? If the government learned to spend our taxdollars properly then we wouldn't be in debt like we are thanks to them. I'm really not looking forward to retirement because right now so many people like myself live paycheck to paycheck and all because of our government.

Doug # BC
said

"Nathan" is right about us being a nation of people with little or no knowledge of personal financial planning.I sometimes think it has something to do with the nanny state mentality we have.The one that has us all convinced that the government will take care of us,even when we refuse to do anything to take care of oursleves.I can Spend all my money the minute I get it.I can use all my money for things like cell phones,cigaretters,fancy cars,and giant sceen TV's,because,when I am broke,the government will take care of me. Debt is the evil that threatens us all.Our parents and grandparents knew this,in spite of lower levels of education in past generations.Debt not only threatens our personal well being,it is a threat to our sovereignty,and to the entire global monetary systems.In fact,one of our greatest failures may well be our inability to educate people as to the consequences of not living within our means.Both as individuals,and as provinces and nations. No one ever stops to think what benefits they may reap in the future,if they only resist the temptation for immediate gratification we get from buying things we want,rather than things we really need.

Joe
said

I totally agree with Jon on this. Taxation is slavery. Especially here in Ontario, we are slaves to Dalton who keeps raising and raising taxes thinking we have more money coming in. Unfortunately it's our fault for electing idiots into office.

John
said

It would help most seniors in retirement if they would get the same amount that we give to Immigrants that are in a "transition stage" and all their family members who come that are too old to work and receive a free pension. The Canadians that have worked all their life andnever received ei in their life get ripped off!

Earthwatcher
said

I am 49 and hoping to retire in 6 years (or less!!) all depending on my level of debt. Primarily, my mortgage.I seem to be the norm, balancing off a credit card, a mortgage and a line of credit. The aim is to retire with no debt but I'll probably have a few years of mortgage to deal with if I can get gone at 55. I am fortunate however as my total net worth right now is at least 3 times the balance on my mortgage.

Prof. Sine Curve
said

To me the biggest concern is with a future government getting in, spending like crazy and then eying the country's biggest source of STORED wealth to pay for it all - that being the combined wealth that all the seniors have saved up during their lives. ___ The politicians could raid this either by increased taxes, or most likely by inflation. If you have, say, a million dollars saved and inflation makes everything cost twice as much, in effect you now only have half that much. Your money vanishes because Ottawa has spent it all earlier and then printed new extra money to pay for their spending, diluting the value of all that has been stored. ____ On that point I feel most secure with the Conservatives as they offer pretty good stability and care with money. The Liberals though want to spend and spend. The worst future situation would be a Liberal minority with the NDP holding the balance of power and insisting on even greater spending.

jjaycee98
said

I found this to be quite shocking! Would be interesting to know what % of these lost most of their retirement funds in the last few years. Would also be very interesting to get follow up details from these same folks at 5 years...10 years.I have a client who did not save any money for retirement...he had a work Pension to look forward to. Then they gave him a buyout-$75,000-one year salary in 2002. They headed back to Nova Scotia with a plan to do Renovations as a business---very few jobs. In 2004 they both turned 60-he started drawing his Pension-$24,000 per year and they both started drawing CPP. They bought a Motor Home for what was left of the Buyout and hit the road. In 2009 they both turned 65 and started collecting OAS. The Pension was reduced to $12,000 per year. (the Company has been bought out by a US company and no one is paying in to the Pension plan). He is working as a Security Guard, she works as a painter. They get about $35,000 in retirement funds, have to pay rent-they lived in Company supplied housing, never owned a house after leaving Nova Scotia in 1981.This has been a lesson to me to see this train wreck occuring. They have maxxed out Credit Cards with a $50,000 limit and have $20,000 on a line of Credit. Lived high for awhile...travel, cruises, winters in Arizona.My biggest concern is not knowing how much we will actually need in 10 years. I don't really worry about living well when I am 80-85. From 60 to 80 though it would be nice to have a few delightful moments.

Catwoman 37
said

Money is tight these days, and you have to keep track of how much money your spending. It is called budgeting.Next thing, you will hear about college and university student debts. Just as bad.It is sad, to see people retire with debt. Especially if they are on a pension.

Mr. spendthrift
said

Some of you commenters are pretty heartless. Not everyone who retires with debt is a drunken sailor. some of us are forced to retire early, long before we'd planned. There's always more to the story.

Nathan
said

"Having access to credit in retirement can be beneficial to managing income and cash flow and provide additional flexibility"No.... for the bank it isn't a bad thing at all!! Watching financially illiterate people of any age pay heaps of interest to banks out of sheer lack of knowledge is painful to watch.Put away 1/10th of any income you receive and NEVER touch it. Invest it and let your wealth grow.PS, does anyone know why there is no education system to handle MONEY in and of itself? If u want a financially knowledgeable nation, implement a "personal financial strategies" course into high school.

DANIEL H
said

I'm not surprized. I'll be carring my mortage into my retirement. But not because of poor planning on my part. I have an exwife that I'm supporting because the laws in this country don't make people responsible for looking after themselves. If she hadn't been so foolish we have our home paid for by now and have well over $1,000,000 saved. Instead the lawyers got it.

Prof. Pye Chartt
said

In related news, 8 in 10 Canadians with "drunken sailor syndrome" will eventually end up living with their children and grandchildren, and of those children stuck with the very individuals who let them live in their basement until they were 30 years-old, roughly 40% will go nuts.

RD
said

And to Celebrate, RBC hikes Mortgage rates again!!

Paul
said

Two things are certain for retirement...paying large amounts of taxes and paying large amounts for drugs.Does the Government care?They never have and never will.

Island Man
said

Seniors can thank Harper and Flaherty for raiding their nest eggs with their betrayal on Income Trusts. Over $25 Billion was wiped out overnight based on 18 pages of blacked out evidence of mythical tax leakage. This was the largest tax blunder in Canadian history and it will have long reaching effects on the ability of seniors to finance their retirement. When these trust convert to corporations this year the dividends will become double taxed as equities in RRSPs are not elligible for the Dividend Tax Credit.Shame on Harper and Flaherty for campaigning to protect seniors and then betraying them withi months of getting their votes. And Canadians let them make this major tax change with no factual basis and no mitigation for the harm done to seniors...shame, shame, shame.

Debt free in AB
said

Unfortunately a lot of the responsibility lies with us as individuals. As a society we have become far to comfortable with debt. Also, we have embraced the consumer 'have to have it now' mentality whether we can afford it or not. How many of us can honestly say we put 10% of our salary, or that we pay off our credit card monthy. Yes, economy, jobs, daily expenses play a factor but so does our willingness to embrace spending on non-essentials. It's a hard reality but blaming others will not get us out of debt.

Jon
said

Expect these stats to go up with idiotic governments like those in Ontario who think that raising taxes even more (its already over half of most people incomes) is the way to better help them.To paraphrase Reagan who rightfully said, the government is here to serve the tax payer, not the other way around. Lower taxes (in Canada's case MUCH lower taxes) Improves lives.

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