73 per cent of employees in Canada have saved less than a quarter of what they wish
VANCOUVER—Fewer Canadians are living pay cheque to pay cheque, according to a new Canadian Payroll Association (CPA) survey.
Of the 3,500 employees across Canada polled, the survey found 47 per cent said they would be in financial difficulty if their pay was delayed by even a week, a 10 per cent improvement over the 57 per cent last year who were just making ends meet.
Another encouraging sign in CPA’s fourth annual survey is that more employees are now finding they are able to increase their savings.
According to CPA, 66 per cent of employees trying to save money this year were able to do so, a marked improvement over the 40 per cent from 2011.
Rate of savings remains low
Although more employees are saving, the rate of savings remains low.
Almost half (46 per cent) of employees in Canada say they’re putting away only five per cent or less of their pay.
Financial planning experts generally recommend a retirement savings rate of 10 per cent of net pay.
Re-assessing retirement needs
Canadian employees also appear to be taking a harder look at their retirement needs.
Only 34 per cent of Canadians feel that savings of $500,000 to $1-million will be sufficient to live comfortably in retirement, according to the survey, compared to 42 per cent in 2011.
Far from reaching retirement goals
The low savings rate is reflected in another worrisome finding.
When asked how close they are to their retirement goal, 73 per cent of employees in Canada say they have saved less than a quarter of what they wish to accumulate.
Of particular concern is the finding that even among Canadian employees closer to retirement (50 and older), 45 per cent report that they are less than a quarter of the way to their retirement savings goal.
Having to work longer
For those employees with a target retirement date, 41 per cent say they’ll now have to work longer—five more years on average—than they planned in 2007.
The top reason cited for having to work longer, according to CPA, was not saving enough money.