However, more than half of Canadians 65+ are still carrying
some form of debt
TORONTO, July 27, 2015 /CNW/ - A recent poll by
CIBC (TSX: CM) (NYSE: CM) finds that on average, Canadians
expect to be debt free by the time they are 56 years old
although some Canadians see themselves carrying debt well into
their sixties. In addition, nearly a third (29 per cent) say
they have no debt while 13 per cent say they will never be
debt free.
Highlights of the poll include:
- 56 is the average age Canadians expect to be debt
free
- 21 per cent say they will be stuck with debt until they
are over 65 years old
- 29 per cent say they are completely free of debt
today
- 13 per cent say they will never be debt free
"While Canadians expect to be debt free by age 56 on average,
not everyone will hit that goal, which means a significant number
of Canadians will still be carrying debt during retirement," says
Christina Kramer, Executive Vice
President, Retail and Business Banking, CIBC. "As debt repayment
goals push closer to retirement age, it puts an added strain on
your ability to save for retirement and manage your cash flow after
you retire."
More than half of Canadians 65 and over still owe
money
The poll found that over half of Canadians aged 65-plus say they
still carry some form of debt today, with credit card debt and
lines of credit as the most common types. This group also said they
didn't expect to have their debts paid off until they are 70
years old on average.
"Cash flow becomes a top priority in retirement, and having to
make debt repayments out of your income will create a drag on your
finances and your ability to have the retirement you want," adds
Ms. Kramer.
Younger Canadians optimistic about debt repayment
Canadians 25-34 years of age have ambitious plans for debt
repayment. This age group on average expects to be debt free by
age 47. However, a closer look at those currently carrying
debt suggests this may be an optimistic goal, as more than 68
per cent of Canadians 45 and over still carry debt, including
31 per cent who still carry a mortgage.
"What people need to remember when attempting to shorten the
road to debt freedom, is that paying down debt is just one part of
a broader financial plan that needs to include saving for
retirement, managing day-to-day expenses and maintaining an
emergency fund," Ms. Kramer says.
Balancing debt repayment and savings goals
Of all Canadians with debt, 32 per cent say they have
made sacrifices or cut spending to better manage their debt this
year and 25 per cent say they have made at least one lump
sum payment towards their debt on top of regular payments. This
aligns with a CIBC poll conducted last December which found that
paying down debt was the top priority for 2015.
"As our poll findings show debt repayment remains a top priority
for Canadians, it's encouraging to see that many Canadians
with debt are setting goals and taking action to pay it off," Ms.
Kramer says.
Three steps to create a debt freedom plan
Becoming debt free takes time and dedication. It's best to have
a clear plan that outlines the steps you should take each month to
get closer to your goals over time. Here are a few tips for putting
your plan on paper:
Step 1: Assess your debt. Make a list of everything you
owe, who you owe and when the payment is due. Be sure to note the
interest rate and monthly payment amount, separating out how much
goes towards interest as opposed to principal.
Next, add up the individual debts to find your total outstanding
balance, and how much you are paying each month in interest to
service those debts. Talk to a financial advisor about possible
ways to structure your debt and potentially lower your interest
costs.
Step 2: Set priorities. It's essential to make at least
the minimum payment due on each debt to avoid penalties and to keep
your credit rating intact. Beyond the minimum, focus your attention
first on the debts that are costing you the most — those with the
highest interest rate.
Step 3: Establish a timeline. Like any goal, it's helpful
to have a deadline; it gives you a "finish line" to work towards.
Keep it realistic and achievable. This is where it can really help
to talk to a financial advisor.
KEY POLL FINDINGS
Average age Canadians expect to be debt free:
Current age range |
Average age they
expect to be debt free |
All |
56 years |
18-24 |
39 years |
25-34 |
47 years |
35-44 |
52 years |
45-54 |
58 years |
55-64 |
64 years |
65+ |
70 years |
Average age Canadians expect to be debt free, by
region:
Region |
Average age expect
to be debt free |
All |
56 years |
British Columbia |
56 years |
Alberta |
54 years |
Manitoba/Saskatchewan |
61 years |
Ontario |
55 years |
Quebec |
57 years |
Atlantic Canada |
58 years |
When Canadians expect to be debt free, by age range:
(* indicates sample size too low to report individually)
When Canadians
expect to be debt free |
Percentage of Canadians |
18-24 years |
* |
25-34 years |
5% |
35-44 years |
7% |
45-54 years |
13% |
55-64 years |
31% |
65+ years |
21% |
I will never be debt free |
13% |
I don't know |
8% |
Percentage of Canadians who currently have the following
types of personal debt:
Types of personal
debt |
Canadians who have
this type of debt |
Credit card debt |
39% |
Mortgage |
33% |
Line of credit |
30% |
Car loan |
22% |
Student loan |
10% |
Personal loan |
8% |
Other types of debt (e.g., retail credit cards,
retail financing plans) |
6% |
I do not have any personal debt |
29% |
Percentage of Canadians who say they do not have any personal
debt, by age range:
Current age range |
Canadians with no
debt |
All Canadians |
29% |
18-24 years |
50% |
25-34 years |
17% |
35-44 years |
18% |
45-54 years |
24% |
55-64 years |
31% |
65+ years |
44% |
What Canadians have done so far this year, if anything, to
tackle their debt:
Made sacrifices/cut spending in order better
manage your debt |
32% |
Set up/made regular payments on my debt |
32% |
Made at least one lump sum payment towards your
debt on top of regular payments |
25% |
Increased my debt repayment amount |
19% |
Implemented a household budget |
19% |
Worked more hours/got a second job |
13% |
Accelerated my debt repayment schedule |
12% |
Talked to a financial advisor about better
managing your debt |
8% |
Consolidated my debt |
7% |
Refinanced my mortgage |
5% |
None of these |
25% |
On June 3 and June 5 2015, an online survey was conducted among
3,013 randomly selected Canadian adults who are Angus Reid Forum
panelists. The margin of error - which measures sampling
variability - is +/- 1.80 per cent, 19 times out of 20. The results
have been statistically weighted according to education, age,
gender and region (and in Quebec
language) Census data to ensure a sample representative of the
entire adult population of Canada.
Discrepancies in or between totals are due to rounding.
About CIBC
CIBC is a leading Canadian-based global financial institution with
nearly 11 million personal banking and business clients. Through
our three major business units - Retail and Business Banking,
Wealth Management and Wholesale Banking - CIBC offers a full range
of products and services through its comprehensive electronic
banking network, branches and offices across Canada with offices in the United States and around the world. You
can find other news releases and information about CIBC in our
Media Centre on our corporate website at www.cibc.com.
SOURCE CIBC