Balancing Act: Pay Down Debt or Save for Retirement?
In a recent survey* of Canadian homeowners from Manulife Bank, nearly half of respondents indicated that their debt was having a significant impact on their ability to save for retirement. The survey also found that just 54% of respondents were confident they’d be debt-free by retirement and less than four in 10 were confident that they’d have sufficient savings to maintain their desired lifestyle in retirement.
What are we to make of these findings? Well, clearly saving for retirement and paying down debt aren’t easy. In fact, the survey found that less than half of homeowners were happy with how they’d managed their debt and day-to-day finances over the past year. However, just because something isn’t easy doesn’t mean it can’t be done. For example, there are tools and strategies for managing your debt more efficiently that could free up extra money for your retirement savings. And, some types of savings plans could generate tax benefits which can then be used to repay your debt.
When it comes to your big, important financial goals - like debt-freedom and a well-funded retirement - you shouldn’t have to choose one over the other. With the right financial tools and a personalized financial plan, you can make your money work harder so it’s more likely your retirement years will be debt-free and financially secure.
*The Manulife Bank of Canada poll surveyed 2,373 Canadian homeowners in all provinces between ages 20 to 59 with household income of more than $50,000. The survey was conducted online by Research House between September 8th and 19th, 2014. National results were weighted by province and gender. More survey results are available at Manulife Bank - Debt Research