Businessman drowning in the sea and asks for help

Affordability and financial stability have become a major issue in Canada. According to the annual BDO Canada Affordability Index, Canadians are feeling financially stuck and struggling to make ends meet due to rising costs of living, stagnant incomes and growing debt loads. 

The index, which examines how affordable life is in Canada, shows that over half (53%) of Canadians are living paycheque to paycheque and one in four (25%) say their debt load is overwhelming. More than one-quarter (27%) don’t have enough for their daily needs. 

Managing debt is a growing concern

Of the Canadians surveyed for this year’s report, 57% say they’re carrying credit card debt (compared to 53% last year) and 31% say the size of their debt is increasing. 

Despite the fact that paying off debt is a top priority for Canadians, it remains a top challenge as well, according to the 2019 index. 

More than four in 10 (43%) 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. 

Canadians have taken on debt in all forms, including mortgage debt (45%), car loans (40%), line(s) of credit (42%), and student loans (15%). According to the report, four in 10 have a non-mortgage debt over $20,000. 

Retirement takes a back seat

The study also reveals that future financial plans — like planning for retirement — have increasingly been put on the backburner, even for those nearing retirement. 

Almost four in 10 (39%) non-retirees admit to having no retirement savings (compared to 31% last year), including nearly one-third (32%) of baby boomers and seniors.

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 (38%) or they need to pay off debts first (17%). 

More than eight in 10 (82%) Canadians think they will have to work longer than their parents did and 69% say that even if they do save they still won’t have enough to make it through retirement. 

The outlook for Gen Xers isn’t any prettier. Of Canadians aged 35 to 54, 38% admit they have no retirement savings, up from 33% in 2018. 

According to the index, this age group continues to be the most indebted. Among the 75% of Gen Xers with debt, 59% carry a credit card balance and 55% have a mortgage (compared to 38% of millennials and boomers/seniors).

Nearly one-quarter (23%) indebted Gen Xers have between $20,000 and $40,000 in non-mortgage debt. 

Compared to men, women are more likely to have growing debt due to lack of income (35% of women vs 28% of men). Women continue to experience more difficulty affording daily essentials and, since last year, the number of women living paycheque to paycheque has jumped to 43%, up from 35% last year. 

Canadians banking on inheritance

As the number of Canadians struggling to meet their financial needs increases, a new poll released by Edward Jones reveals many Canadians are counting on an inheritance to help them. 

The report, released on Monday, showed that 44% of Canadians expect to receive an inheritance in the future. 

Edward Jones presents the findings of an online survey conducted by Leger of 1,522 Canadians last December.

The BDO Affordability Index was developed in partnership with BDO Canada and Angus Reid Global. The online survey was conducted by a randomized sample of 2,047 Canadian adults who are members of the Angus Reid Forum between August 7-13, 2019. 

Online surveys cannot be assigned a margin of error because they do not randomly sample the population.

Read the full BDO report here.