Crushing debt burden restricting our ability to save

If you are finding that bills are getting in the way of your ability to save, you’re not alone.

According to recent research from BDO Canada, reported on in Advisor’s Edge, one in four of us say “their debt load is overwhelming,” and 53 per cent of us are living “paycheque to paycheque.”

Ominously, a surprisingly high 27 per cent of Canadians say “they don’t have enough for their daily needs,” the article notes.

What’s the source of all this debt?

Credit cards are a problem, the article informs us. “Fifty seven per cent say they are carrying credit card debt.. and 31 per cent say the size of their debt is increasing.”

And while many of us are trying to pay down that choking debt, success is slow, the article notes.

“More than four in 10 (43 per cent) of Canadians say they are slowly paying off household debts, yet almost one-third admit they have delayed paying off their credit card because they couldn’t afford it,” the article notes.

Other sources of debt that are bedeviling us include mortgage debt (45 per cent), car loans (40 per cent), lines of credit (42 per cent) and student loans (15 per cent), the article says. Four in 10 of us have non-mortgage debt of more than $20,000, the article warns.

What are the impacts of all this debt?

Well, for one thing, there’s little money left to save for retirement, the article states.

“Almost four in 10 (39 per cent) of non-retirees admit to having no retirement savings (compared to 31% last year), including nearly one-third (32%) of baby boomers and seniors,” the article says. “Canadians attempting to save for retirement are growing increasingly pessimistic. The top reasons non-retirees have no retirement savings are that they can’t afford to save (38 per cent) or they need to pay off debts first (17 per cent).

This means, most surveyed say, that they will have to work longer than their parents did to be able to afford to retire. Others are banking on inheritance – not a safe bet given the expense of long-term care – to right their financial ship.

Let’s face it. We all know debt reduction is a daunting task, but one that has to eventually get done. But you can’t let it trump your retirement savings plan, particularly if you’re saving on your own for life after work without any sort of workplace plan.

Be sure to pay yourself first, even if it is just a little bit, and then manage the bills. If you can avoid racking up more credit, the balances will come down, the payments will flatten out, and you can gradually be on the plus side of the ledger.

Meanwhile, that little bit you can put away for retirement will steadily grow. Like a teeter totter, eventually you will move from the bottom to the top.

If you are saving on your own for retirement, a wonderful way to get there is through the Saskatchewan Pension Plan. They’ll grow your savings through professional investing at a low fee, and when the day comes to collect the moolah, they have a variety of interesting lifetime annuity options to choose from. They are worth a click to check out.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22