Fewer Canadians are living paycheque to paycheque, according to a survey by the Canadian Payroll Association (CPA). Although 47 per cent are reporting they would be in financial difficulty if their pay was delayed by even one week, it is an improvement over the 57 per cent last year who were just making ends meet.
The provinces or regions with the highest percentage of employees living paycheque to paycheque are: the Maritimes (54 per cent), Manitoba (53 per cent) and Ontario (52 per cent). Quebec has the lowest percentage (33 per cent), found the survey of 3,500 employees.
Many more employees are finding they are able to increase their savings. While last year only 40 per cent of employees trying to save more were able to do so, this increased to 66 per cent in 2012.
Employees in Quebec lead the way with respect to being able to successfully boost their savings (71 per cent), found the survey.
Fewer (34 per cent) Canadians now feel savings of $500,000 to $1 million will be sufficient to live comfortably in retirement compared to last year (42 per cent) while more (38 per cent) think a nest-egg of between $1 million and $3 million will be needed (compared to 27 per cent last year).
However, the rate of savings remains low. Almost one-half (46 per cent) said they're putting away only five per cent or less of their pay. Financial planning experts generally recommend a retirement savings rate of 10 per cent of net pay, found the CPA.
The low retirement savings numbers are especially worrisome among older workers, said Patrick Culhane, president and CEO of the CPA.
"Many are people who will be leaving the workforce in a few short years, yet most of them remain far below their retirement targets."
And when asked how close they are to their retirement goal, 73 per cent of employees said they have saved less than one-quarter of what they wish to accumulate. Even among employees closer to retirement (50 and older), 45 per cent report they are less than one-quarter of the way to their retirement savings goal.
For those employees with a target retirement date:
•41 per cent said they'll have to work longer — five more years on average — than they planned in 2007.
•The top reason cited for having to work longer was "I'm not saving enough money for retirement."
•The median retirement date is 60 years of age.
Two out of every five employees are spending at, or in excess of, their net pay, found the survey. In Ontario, an even higher percentage of employees (42 per cent) are spending at this rate.