April 26, 2010 / 3:50 PM / 9 years ago

Many Canadians carry debt into retirement

TORONTO (Reuters) - One in four Canadians over the age of 50, who have at least C$100,000 ($100,000) in assets, retired with some form of debt, according to a Royal Bank of Canada survey released on Monday.

Nearly one-quarter of the 2,143 respondents had a mortgage on their main residence when they retired, the poll found.

While the majority of respondents said they feel saving is important, 28 percent said they took on more debt after retirement.

“More and more, Canadians are carrying debt into retirement, which is not necessarily a bad thing,” Lee Anne Davies, head of retirement strategies at RBC, said in a release.

“Having access to credit in retirement can be beneficial to managing income and cash flow, and provide additional flexibility.”

Davies said RBC advises starting retirement planning early with a focus on paying down debt, saving, and budgeting for pre- and post-retirement years.

A separate survey released on Monday by Canada Mortgage and Housing Corp found that 81 percent of home buyers are comfortable with their current level of mortgage debt.

More than two-thirds of recent home buyers among the federal housing agency’s survey of 2,503 active mortgage users said they feel there is a strong chance they will pay off their mortgage sooner than required.

In the RBC poll, inflation and taxes were among the biggest concerns for retired Canadians.

More than one-third of retirees were worried about the impact of inflation on their retirement income, RBC said. That number jumped to 43 percent among those who had not yet retired.

Six out of 10 retirees also said they were worried about the effect taxes would have on their income, with two-thirds believing their taxes would go up in the next 10 years.

The retirees polled said they were living on 56 percent of their pre-retirement income, pointing to a sharp drop in spending in retirement, RBC said.

The RBC survey was conducted by Ipsos Reid March 10-19. The CMHC poll was conducted February 11-28.

($1=$1 Canadian)

Reporting by John McCrank; editing by Rob Wilson

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