Waterloo – Nearly nine in 10 (89%) homeowners in Canada’s three Prairie Provinces indicate that being debt-free is very important to their definition of a successful retirement according to a recent debt and retirement survey conducted by Manulife Bank of Canada. This is second only to “good health” (93%) and slightly higher than “sufficient retirement income to maintain my current lifestyle” (87%).
The survey also found that nearly half (48%) of homeowners living in the Prairies would find it very stressful to reach retirement age with debt still outstanding. This finding aligns closely with the national average of 51 per cent. Despite their clear concerns about reaching retirement age with outstanding debt, three quarters of Prairie province homeowners fail to seek professional advice when it comes to managing their debt and day-to-day cash flow – a figure significantly higher compared to other regions of Canada (64%).
Interestingly, and consistent with national findings, Prairie homeowners judge many non-financial factors to be relatively less important to a successful retirement. Only 55 per cent feel it’s important to live near family, while 68 per cent feel “keeping busy with a hobby or as a volunteer” and 47 per cent feel “having a broad group of friends” are key to a successful retirement.
This is the first time that Manulife Bank focused on surveying Canadians about debt in the context of retirement planning. Additionally, Manulife Bank increased its survey sample size this year to allow for regional-specific data and to demonstrate similarities and differences in debt management and perceptions across the country.
“Prairie province homeowners see a significant correlation between being debt-free and having an enjoyable retirement,” explained Dale Dyck, a financial advisor with Delphi Private Wealth Management in Calgary. “Reaching out to a financial advisor for help developing a reasonable and manageable debt management plan could improve their odds of being debt-free when they’re ready to retire.”
Across Canada, debt-freedom expectations change as people get older
Manulife Bank’s debt and retirement survey found that three in four Canadian homeowners consider debt-freedom to be among their top financial goals – a finding that is relatively consistent with Manulife Bank’s past consumer debt studies. However, their expectation about when they will actually achieve debt-freedom appears to be largely dependent upon their age, a finding that is consistent across the country.
Most Canadian homeowners in their 30s (73%) who reported having debt expect to be debt-free before they turn 60. That number decreases to two-thirds for homeowners in their 40s. Just one third of homeowners in their 50s expect to be debt-free before they turn 60, with one in five indicating they either don’t know when they’ll be debt-free (14%) or don’t expect to ever be debt-free (7%).
Overall, just over half of the survey respondents are confident they will be free from debt when they reach their planned retirement age. This relative lack of confidence appears to be well-founded, as only half of Canadian homeowners report having less debt than they did 12 months ago.
“It’s encouraging to see younger homeowners express optimism about becoming debt-free” added Doug Conick, President and CEO of Manulife Bank of Canada. “However, the experience of more seasoned homeowners, revealed by the survey, underscores the importance of developing a concrete debt-reduction plan and sticking to it. Most will find becoming debt-free much easier if they have a concrete plan for how to get there.”
Prairie homeowners are focused on debt management
Prairie Province homeowners are concerned about the challenges they face regarding household debt. Among homeowners who are neither debt-free nor retired, 46 per cent plan to focus more on repaying debt than on saving for retirement over the next 12 months, compared to just nine per cent stating the reverse. About four in 10 (44%) plan to focus equally on retirement savings and debt repayment.
In addition, within two-adult households, almost 63% of couples review debt with one another at least every two months, indicating a concerted effort to manage debt.
Of the quarter of Prairie homeowners who do seek professional advice in managing their debt and day-to-day cash flow, two-thirds (67%) have a concrete plan for becoming debt-free, a strong indication that more Prairie homeowners should consider reaching out to a financial advisor.
Debt repayment is a priority, ahead of sticking to retirement plans
Prairie homeowners put a higher priority on being debt free before they retire. Nearly six in 10 indicate that, if they reached their planned retirement age and still had debt, they would continue to work, either part time (28%) or full time (31%) until their debt was gone. In contrast, just a third (33%) would retire when they reached their planned retirement age even if they had debt.
About the Manulife Bank of Canada Debt and Retirement Survey
The Manulife Bank of Canada poll surveyed 2,003 Canadian homeowners between ages 30 to 59 with household income of more than $50,000. It was conducted online by Research House between March 5 and March 16, 2012. Full survey results are available at manulifebank.ca/debtresearch.
Audio clips and infographics attached. More audio clips and infographics can be found at repsourcepublic.manulife.com
About Manulife Bank
Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife Financial. As Canada’s first advisor-based bank, it has successfully grown to more than $20 billion in assets and serves clients across Canada. Manulife Bank believes that effective debt management is a key contributor to financial health and that, by working with a Financial Advisor to create a customized financial plan that incorporates debt and cash flow management, many people could save money, become debt-free sooner and achieve more of their financial goals. It’s for this reason that Manulife Bank offers its innovative deposit and loan products through independent financial advisors to help individuals make the most of their financial plan. Manulife Bank employs a team of specialists across the country that work with homeowners and financial advisors to design cash flow programs that are more effective, efficient and flexible. For more information about Manulife Bank products, speak to your financial advisor or visit manulifebank.ca. To learn more about Manulife One or Manulife Bank Select or to find your local Manulife Bank specialist ask your advisor for a referral or visit manulifeone.ca or manulifebankselect.ca.
About Manulife Financial
Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. In 2012, we celebrate 125 years of providing clients strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife Financial and its subsidiaries were C$512 billion (US$512 billion) as at March 31, 2012. The Company operates as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife Financial can be found on the Internet at manulife.com.
Tracy Van Kalsbeek
Public Relations Consultant
Manulife Financial Canadian Division