Wealth managers battle Canadian reluctance to save
By Andrea Hopkins
TORONTO (Reuters) - With more Canadians saying they can't afford to invest, the country's big banks are struggling to persuade people that socking away a little money now is the only path to a secure retirement.
While Canadians once outpaced their U.S. counterparts in terms of savings, the nation's luck in avoiding the worst of the recession and financial crisis meant few learned the painful lesson of too much debt, and fewer than ever feel able to save for retirement.
Sixty-four percent of Canadians said they can't afford to invest more, up from 59 percent in 2011 and 53 percent in 2010, according to a poll released on Tuesday by Scotiabank, Canada's third-largest lender. Confidence in levels of current savings wasn't high, either, with only 19 percent saying they had already invested enough, down sharply from 29 percent in 2010.
"In general when it comes to affordability, (the poll numbers) show the strain that we've all experienced over the last couple of years with the economic volatility and global concerns out there," said Mike Henry, head of retail payments, deposits and lending at Scotiabank.
The online poll of 1,003 adult Canadians was conducted from November 28 to December 13.
It comes as little surprise that fewer Canadians feel able to invest these days, with government statistics showing households carrying more debt than ever before. The ratio of debt to personal disposable income in Canada has risen steadily since the late 1980s, rising to a historic high of 164.6 percent in the third quarter of 2011.
That surpasses the level in the United States and Britain, where consumer deleveraging has reversed rising debt levels, but remains about 10 percentage points below the peak reached south of the border before the housing crash in 2007, according to Statistics Canada.
Canada's household saving rate, calculated by dividing household savings by disposable income, is forecast to drop to just 3 percent in 2013, compared with 9.1 percent in Australia, 10.6 percent in Germany, 1.9 percent in Japan and 4 percent in the United States, according to the OECD's June 2012 Economic Outlook. Continued...