I found this article on CBC very interesting. Basically it was saying almost 60% of Canadian’s are living paycheck to paycheck, which is disturbing to some degree but what got my attention was the number that 50% of people are saving less than 5% of their net pay for retirement.
I thought that looked a bit fishy as most people I know are at least saving that much, so I dug into it a bit more and found the original survey document. There the original question to this statistic was:
What percentage of your pay cheque do you put toward savings? Please check only one.
6. 20% or higher
7. I prefer not to respond
8. I don’t know / not applicable
As you can see it’s a bit different than the news article suggests. This isn’t CBC’s fault as they copied most of the original press release, which can be found here. So in reality the question ignores any payroll savings like a pension plan, group RRSP, or saving bond deduction that could be used towards retirement. Also it doesn’t even discuss retirement at all! It’s a damn lie they way they presented it.
Keep in mind the median income for Canadian families was $61,800 on an after tax basis in 2007 (see here), while for a single person it’s only $24,200. So after paying the mortgage, bills, payroll savings, CPP and EI and the typical spending habits. Yes, I can believe only half of people are saving more than 5% of their paycheque. That’s a statistic that I can believe.
So in general keep in mind news releases can lie, but also take heart. Even if you manage to save 5% of your paycheque your already ahead of half of all Canadians.