2014

CIBC Poll: More Than Half of all Retired Canadians Carrying Debt

Nearly one in five retired Canadians say their debt level has risen in the past year

TORONTO, July 15, 2013 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) Poll conducted by Harris/Decima reveals 59 per cent of retired Canadians say they are carrying debt.  Among this group, 19 per cent say the amount of debt they are carrying has increased in the past 12 months.

Highlights of the poll include:

  • 59 per cent of retired Canadians said they currently have debt, compared to the national average of 71 per cent across all age groups
  • Among retired Canadians with debt, 19 per cent say in the past 12 months their level of debt has increased, while another 36 per cent say their debt levels have stayed the same -indicating more than half (55 per cent) of all retired Canadians with debt missed an opportunity to pay it down over the past 12 months

"When you reach retirement, you should be able to enjoy the money you have worked hard to save over your lifetime," said Christina Kramer, Executive Vice President, Retail Distribution and Channel Strategy, CIBC. "Canadians carrying debt into retirement may miss out on the full benefit of their retirement savings because they are using some of it to make their monthly debt payments."

While fewer retired Canadians are carrying debt compared to the national average across all age groups, paying down your debt becomes more difficult after retirement when many Canadians transition to a fixed income.

Retirees Carrying Debt on More than one Product

With more than half of all retired Canadians managing debt, the poll also reveals that 37 per cent of retired Canadians are juggling two or more debt payments a month.  Among retired Canadians with debt:

  • 39 per cent say they are carrying debt on their credit card
  • 30 per cent say they are carrying debt on their line of credit
  • 16 per cent say they are carrying debt on their mortgage
  • 14 per cent say they are carrying debt on their loan

"With today's low interest rates, there is an opportunity for retired Canadians to review their monthly cash flow and make progress in paying down their debt.  Although future interest rate changes can't be predicted, being on a fixed income means any interest rate increases will have a greater impact on your monthly cash flow for those retired Canadians carrying debt," explained Ms. Kramer.

"An advisor can help you review all of your finances and determine whether there are ways to accelerate your debt repayment, such as consolidating your debt at a lower interest rate or making slightly higher regular payments," adds Ms. Kramer.  "Cash flow is a major component of retirement planning, meaning that even small reductions to your debt load can make a big difference in your monthly cash flow."

Advice on Managing Debt for Retired Canadians:

For Retired Canadians focused on paying down debt, Ms. Kramer offers the following advice:

  • With many retired Canadians juggling more than one debt payment a month, an advisor can help to structure your debt to minimize overall interest costs by utilizing a debt product with a lower interest rate
  • Make lump sum payments to higher interest debt first to reduce interest costs
  • While interest rates remain near historic lows, don't ignore the long term benefits of making small adjustments to your payment today.  Setting your debt payment even slightly higher than your required payment can reduce your overall interest costs and help free up some of your monthly cash-flow
  • Use free budgeting tools to help you stay on budget - CIBC CreditSmart available to CIBC credit card holders allows you to set customized budgets and receive spend alerts if you exceed your planned budget for the month, helping you stay on top of your everyday budgeting and saving

KEY POLL FINDINGS

Percentage of Retired Canadians currently managing some form of debt, by region:
 
National 59%
Atlantic Canada 65%
Quebec 58%
Ontario  60%
Manitoba and Saskatchewan 58%
Alberta 53%
British Columbia  59%
   
Among Retired Canadians that said they are currently managing debt, percentage
that say their debt has increased or stayed the same in the past 12 months, by region:
 
National 55%
Atlantic Canada 82%
Quebec 50%
Ontario 54%
Manitoba and Saskatchewan 35%
Alberta 52%
British Columbia 52%
   
Among Retired Canadians that said they are currently managing debt, percentage
that say they are juggling two or more debt payments each month, by region:
 
National 37%
Atlantic Canada  42%
Quebec 38%
Ontario 36%
Manitoba and Saskatchewan 36%
Alberta 35%
British Columbia   34%

*Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in subsamples of 766 retired Canadians between March 28 to April 7, 2013 and 373 retired Canadians between April 25 - 28, 2013. Samples of this size have a margin of error of +/-3.5%, 19 times out of 20 and +/-5.1%, 19 times out of 20 respectively.

CIBC 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.

SOURCE CIBC



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