Three quarters of Canadians aged 45-64 hold some form of debt, and nearly half view their current level of debt as an obstacle to reaching financial goals
TORONTO, Aug. 17, 2011 /CNW/ - A new poll from CIBC conducted by Harris-Decima reveals that as Canada's largest demographic moves closer to retirement, 46 per cent of Canadians aged 45-64 are still working to pay off their mortgage - including 33 per cent of those between 55 - 64 years of age. More broadly, the poll also revealed 75 per cent of baby boomers still hold some form of debt.
According to past CIBC research released in January 2011, boomers identified planning for their retirement as their top financial priority for the year, but a recent CIBC poll on savings revealed that almost one-third (30 per cent) of boomers felt they were doing a poor job of building their savings so far in 2011. The findings of today's poll suggest that part of the challenge for baby boomers may be the need to continue making mortgage payments in the years traditionally associated with building savings for retirement.
"Having identified retirement planning as their top priority for 2011, these poll results show that boomers still have progress to make on paying down their mortgage and other debt which will allow them to accelerate their retirement savings," commented Colette Delaney, Senior Vice President, Mortgage, Lending, Insurance and Deposit Products, CIBC. "Paying off your mortgage sooner can free up significant cash flow each month, which in turn helps you build your retirement savings faster and ultimately achieve the retirement you want for you and your family."
Few boomers have taken the time to sit down with an advisor to create a comprehensive plan towards achieving their goals. Among Canadians aged 45 - 64 with debt, only 21 per cent have had a conversation with an advisor sometime in the last year about strategies to reduce their debt faster.
"It may be of particular benefit for boomers to create an integrated financial plan, with the help of an advisor, including re-evaluating your debt repayment strategies and balancing that against the level of savings you'll need to enjoy retirement," commented Ms. Delaney. "Reviewing your overall interest costs and determining how best to allocate your money towards your debt can help you reach your financial goals and enjoy the retirement you deserve."
Among boomers in the survey who reported holding some form of debt, 42 per cent see their debt as an obstacle to achieving their financial goals, although many boomers (64 per cent) see themselves as making good progress towards paying down their debt.
Despite the increased importance of building their savings in the years leading up to retirement, the poll also reveals boomers with debt are not any more likely than other Canadians to be taking extra steps towards debt reduction:
- Only 47 per cent of boomers have made at least one lump sum payment towards their debt this year versus 46 per cent nationally
- 44 per cent see themselves as making sacrifices in order to better manage their debt versus 46 per cent of all respondents
"As boomers near retirement, managing and eliminating debt to allow for savings growth is a priority, and while it's encouraging to see progress being made, these poll results show there is room for boomers to take further steps in this direction," commented Ms. Delaney. "There are simple strategies those approaching retirement should consider, from making principal payments towards their mortgage to implementing a budget to help keep their debt repayment and savings on track."
While some Canadians nearing retirement may plan to sell their homes and downsize, anyone holding a mortgage could benefit from taking a second look at their mortgage and the interest rate they are currently paying. With rates near historic lows and special offers like CIBC's Mortgage Switch offer, even boomers close to paying off their mortgage may have an opportunity to switch to a mortgage with a lower interest rate, allowing more funds to be directed towards principal repayment, or retirement savings.
KEY POLL FINDINGS
Percentage of poll respondents who said they hold a mortgage, by age:
Age 25-34 - 48%
Age 35-44 - 65%
Age 45-54 - 54%
Age 55-64 - 33%
Age 65+ - 12%
Boomer average (ages 45-64) - 46%
Among boomers - Does your current level of debt represent an obstacle in achieving your future financial goals?
A significant obstacle - 8%
Somewhat of an obstacle - 34%
Not much of an obstacle - 29%
Not at all an obstacle - 28%
Among boomers - How much progress would you say you've made on paying down your debt this year?
Very Good Progress - 29%
Good Progress - 36%
Fair Progress - 21%
Poor Progress - 8%
Very Poor Progress - 6%
Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in a sample of 2,008 Canadians between June 30, 2011 and July 10, 2011. With 890 of these surveys completed with Canadians aged 45-64 the baby boomer data has a margin of error of +/-3.3%, 19 times out of 20.
CIBC (CM: TSX;NYSE) is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.