To pay off debt, or save for retirement? That is the question. At least, it’s the question that was asked by Manulife Bank to over 2,000 British Columbia homeowners. The answer came back, and they show that most homeowners in the province want to enter retirement debt-free – and that’s more important to them than actually saving for retirement.
The poll questioned those in the province that were neither retired nor debt-free and it found that 46 per cent of us would rather pay off our debt than put money away for retirement. The survey also showed that only 11% planned on saving, not paying money back. The survey asked questions pertaining to all kinds of debt including first mortgages and second mortgages, such as HELOCs, as well as consumer debt.
Stuart Kirk, a retirement planning specialist with Precision Wealth Management in Parksville, B.C. stated that he wasn’t surprised from the survey results saying, “Like most Canadians, B.C. homeowners understand that a stress-free retirement relies not only on sufficient savings, but also on being debt-free.”
And a quick look at recent stats show that Canadians wanting to pay off their debt shouldn’t surprise anyone else, either. Equifax Canada reported in January that credit card debt dropped by 3.4 per cent last year, and outstanding balances on credit products increased by just four per cent in the same year. And Benjamin Tal, deputy chief economist at CIBC World Markets, said in a report of his last week that consumer credit in Canada has increased slower than in the U.S. since 2002; and the current growth of debt sits at about zero, said Tal.
Scott Bergen, director of communications and public relations at Manulife Bank, says that the reason people may be getting more serious about debt is because they have more of it than ever before. “Probably people have more debt than they did in the past because the housing market has gone up so much in the past several years, so people’s mortgages are bigger, education is getting more expensive and the cost of living has gone up.
But while being debt-free during their retirement years might be a priority for those in B.C., it’s not a top priority. The number one consideration, according to the survey, is that people want to remain in good health; having money to last through those golden years ranked only third. Still, that’s higher than ranking for living near family, taking up a hobby or volunteer work, and having a large group of friends.
