'The not so golden years' a quarter of retired Canadians in debt, survey suggests

A "worry-freeretirement" may be a thing of the past, according to a new Sun Life Financial survey, which findsthat a quarter of retired Canadiansare in debt in their golden years.

About 25 per cent of the 750 Canadians polled between the ages of 55 to 80 yearsforthe Sun Life Financial Barometer said they have debtthat ranges from mortgages to car payments.

TheseCanadianswere either fullyor partially retired when they were surveyed in October aspart of anonline poll that included 2,900 people between theages of20 to 80 years.

"From credit card debt to a mortgage, retirees are faced with a list of expenses in life after work," saidJacques Goulet, president, Sun Life Financial Canada, when the findings were released this week.

"We recognize that managing finances can be overwhelming, particularly for those who are no longer working."

Of those in debt, about one in five were still making mortgage payments, while 66 per cent had unpaid credit cards.

Type of debt

Here's a look at theother types of debt those retired werecarrying:

• 26 per centweremaking car payments.
• Seven per centhadunpaid health expenses.
• Sevenper centowed money on holiday expenses or vacation property.
• Six per centhadn'tpaid off home renovations.

Retired Canadians on average had $11,204 in non-mortgage debt, according to the survey.

But among those that were still working, nearly 30 per cent said they continued to work because they need to.

Tom Reid ofgroup retirement services atSun Life Financial said retiring Canadians are carrying debt more often than they have in the past.

People are actually poorer than they think, but they whistle past the graveyard because their bank is telling them that they're richer than they think.- John Degoey, iA Securities

"One in four aren't paying off their monthly bills," he said. "Although it can seem far away, retirement creeps up faster than you think."

However, retirement expert Malcolm Hamilton of C.D. Howe Institute saidthat even though20 per cent of the retired respondents werestill making a mortgage payment, it doesn't necessarily mean they have a financial problem.

"Without knowing more about the size of their debts relative to their assets and the size of their debt repayments relative to their incomes, it is impossible to say whether seniors are experiencing financial hardship," he said.

Retirement savings

The survey also foundthat a quarter of working Canadians, those aged 20 to 64, were dipping into their retirement savings.

About 63 per cent were doing so because they said they needed to pay for things such as health expenses and other debt.

The findings are similar to a survey released last week by the Bank of Montreal that showed about 40 per cent of Canadianswithdrewmoney from their RRSPs.

Toronto-based financial advisor and Industrial Alliance Securities portfolio manager John De Goey said he was not surprised by the results of the survey and thinks the findingsare reasonably accurate.

"It suggests that a large percentage of the population either doesn't think about retirementmuch or doesn't think about it at all," he said.

"Even a good proportion of those who are aware of the need to save fail to properly quantify how much they'll need."

He said most financial planners are using return assumptions for retirement fundsthat are "unreasonably"high.

"A few people end up saving too much as inmore than needed, but the majority fall short," he said, pointing out thatexpected returns from pension plans will be lower than they have been in the past as people live longer.

Living longer

Respondents of the survey retired at an average age of 59, but life expectancy in Canada is continuing to creep higher.

The average life expectancyin Canada is currently age 84 for men and age87 for women.

De Goeypoints out thatCanadians get the most money in retirement if they wait until age 70 to begin taking fromthe Canada Pension Plan (CPP), as long as you live to be about 82 years or older.

"The majority of Canadians live to be more than 82, yet only a very small percentage of Canadians wait until age 70 to begin taking their CPP entitlements," he said.

He added thatCanadians may be having trouble preparing for retirementbecause theyare receiving mixed messages about it.

"We have chartered banks running ads that say you're richer than you think. In many cases, that's the exact opposite of what reality shows," he said.

"Now we have a double-whammy.People are actually poorer than they think, but they whistle past the graveyard because their bank is telling them that they're richer than they think."

But Hamilton of C.D. Howe pointed outthat most studies have found relatively little difference between the standard of living of working Canadians compared to those who are retired.

"This suggests that Canadians have done a better job preparing for retirement than anyone gives them credit for," he said.

The onlinesurvey of 2,900adult Canadiansby Sun Life Financialwas conducted by Ipsosbetween Oct. 13and 19, 2017.This included 750 Canadians aged 55-80 who are either fully retired or partially retired (working less than 30 hours per week). For comparison purposes only, a probability sample of the same size would yield a margin of error of plus or minus4.1 percentage points for the retired respondents. For the employed sample, it wouldyield a margin of error of plus or minus 2.4percentage points.