The “golden years” for B.C. renters and mortgage holders might resemble fool’s gold, as retirement savings take a backseat to monthly housing payments.
The majority of B.C. renters (82 per cent) and mortgage holders (63 per cent) said that they have not started saving for retirement or have saved less than they planned to by their age, according to a Feb. 27 survey from financial services firm Co-operators.
Meanwhile, 37 per cent of renters and 47 per cent of mortgage holders expect to work either full time or part time after the age of 65.
“Canadians are facing a precarious and challenging situation as they try to prioritize their spending. As a result, many are putting their retirement at risk, especially those who pay a mortgage or rent," said Rob Wesseling, president and CEO of Co-operators, in a statement.
"This is a clear signal that today's economic strain is jeopardizing the long-term financial security of most Canadians."
The average rent for a one-bedroom, unfurnished unit in Metro Vancouver is $2,379, according to a Feb. 16 report by rental agency Liv Strategies Inc. On the mortgage side, TD Bank is predicting an average increase of roughly 30 per cent increase in 2024 to monthly mortgage payments, according to a December report.
“The fastest increase in interest rates in decades means Canadians with mortgages are renewing at rates they likely did not expect at the beginning of their mortgage terms. By the Bank of Canada's estimates, roughly 50 per cent of mortgages that were initiated before interest rate hikes began will face higher rates by the end of this year,” said TD Canada economist Maria Solovieva in the report.
Almost half of B.C. renters surveyed (47 per cent) and more than a third (37 per cent) of mortgage holders said they are unsure of how they will fund their retirement.
In addition, 18 per cent of renters and 37 per cent of mortgage holders think that their Registered Retirement Savings Plan (RRSP) and their savings will be enough to cover retirement costs.
On the flip side, 69 per cent of mortgage-free B.C. residents say that they have saved as much or more than they planned to by now.
Only 17 per cent are unsure if they can fund their retirement, while 69 per cent are confident that their RRSP will suffice.
"These survey results show that Canadians are facing a tough choice – paying for living expenses today or putting some money away for tomorrow. But by setting aside their long-term goals, they're risking a bleak future," said Jessica Baker, executive vice-president of retail wealth with Co-operators, in a statement.
