60% of Ontarians live paycheque-to-paycheque

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By John Goddard | Wed Sep 07 2011

Eight years working in administration for non-profit dance and theatre companies left Iona Frost professionally fulfilled but behind in her retirement savings goals.
She lived sensibly, meeting her rent, Internet and other payments, and getting into shows for free through bartering and volunteering.

Internet and other payments, and getting into shows for free through bartering and volunteering.

But her retirement-savings targets proved hard to hit, she says, putting her roughly into a category with a majority of other Ontario workers in a survey to be released Thursday by the Canadian Payroll Association.

Sixty per cent of those responding to an online poll this summer said they live paycheque-to-paycheque. Nationally, the figure stands at 57 per cent.

Most people said they likely need more than $750,000 to retire and they are not on track. Instead, they are getting into trouble with credit-card debt and overspending, unable even to keep three months worth of expenses on hand in case of emergency.

On the last score, Frost stands out as an exception.

“I have lived by that principle of three months savings,” she said Wednesday. “When something unforeseen comes along it can be a real blow, even an unexpected dental bill.”

At 37, her problems had been low pay and little room for advancement, which led her four months ago to upgrade her skills and establish herself as an independent consultant under the name SpringForward. One of her first clients was the salsa school Go Dance Mambo.

“So far so good,” she says. “I was able to make some great connections at my last job and one of my volunteer jobs turned into a business opportunity.”

In the survey, 74 per cent of Ontario respondents said they have saved less than one quarter toward their retirement savings target.

“Even the older age groups are not saving for retirement,” said association chairperson Dianne Winsor. “More than 40 per cent of Canadian employees 55 to 65 are still less than a quarter of the way.”

At 49, Khadijah Ignatova said she is behind as well.

Five years ago, she arrived in Canada from Bulgaria with a master’s degree in Russian language and literature. With help from Thorncliff Neighbourhood Office, she found a minimum-wage job as a security guard.

She meets her expenses, including rent, TTC pass and cellphone, she said. Instead of plunging her extra money into retirement savings, she plans to invest in a Masters of Education degree.

“I’m going to look for a decent job,” she said. “If I’m not able to save for retirement, I think I’ll find a way to survive.”

In the survey, 50 per cent of employees nationally and 53 per cent in Ontario reported they are saving 5 per cent or less of net earnings.

Financial advisors recommend that workers put 10 per cent into savings, said the association, which consists of professionals administering company payrolls and deductions.

A total of 2,070 employees responded to the survey between July 6 and Aug. 2, using something called a convenience sampling methodology.

Calculating a definitive margin of error is not possible with the methodology, researchers said, but would likely be in the range of plus or minus 2.2 per cent 19 times out of 20.

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http://www.moneyville.ca/article/1050864--60-of-ontarians-live-paycheque-to-paycheque?bn=1

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