Despite more than a decade of economic growth in Canada, many middle-income families are not benefiting from our country’s success as fully as they could.
Primerica has spent the past 33 years helping middle-income families prepare for their financial futures, and we are familiar with their needs.
To better understand their level of financial preparedness, we recently commissioned independent research to gather insights into how they feel about their personal financial situation and how active they are in planning for their financial security. We also created a Financial Security Scorecard to assess their financial well being, grading them on a variety of financial fundamentals with scores ranging from A to F.
The results of Primerica‘s study — 2019 Canadian Financial Security Monitor — were released publicly on May 28, 2019. Not surprisingly, the Monitor revealed a general lack of long-term financial preparedness.
Only one-third of middle-income Canadians feel confident in their understanding of general financial concepts such as budgeting, saving, and investing — far less so when it involves any degree of complexity.
Retirement savings is the biggest financial concern among this group (62%). However, the majority don’t view retirement savings as a critical element of success until after age 50, leaving significantly less time to set aside funds needed to retire comfortably.
The Monitor revealed that many (40%) would not have enough savings to cover three months of expenses if the primary breadwinner in their household lost his or her job. It also found that many lack basic life insurance coverage, with over one in four not having any life insurance at all.
Additionally, middle-income households carry an average of $3,100 of credit card debt.
On the upside, the findings draw a strong correlation between middle-income Canadians having access to financial advice and better financial outcomes.
Indeed, those who have met with a financial representative showed remarkably stronger financial knowledge and preparedness as measured by the Financial Security Scorecard.
More than half (57%) of those who met with a financial representative scored an A or a B on their Scorecard rating compared to just 26% of those who have not met with a financial representative. Those who see a financial representative are much more confident in their ability to reach their financial goals.
Poor household financial preparedness is not just bad news for the impacted families; it also is a public policy issue given its potential to substantially increase their dependence on government resources.
The Monitor revealed that middle-income Canadians continue to place value on and receive tangible benefits from financial representatives.
When given a choice between meeting with a licensed representative in-person or doing their own online research to make a major financial decision, the majority (64%) of middle-income Canadians would choose to talk with a financial representative.
Financial advice should be within reach of every Canadian, not just a privilege reserved for the wealthy. Families are not struggling for lack of trying — they often just don’t know where to start and how to determine the right next steps toward a more secure financial future.
— Adams is the CEO of Primerica Canada, a leading provider of financial services to middle-income households.