Hope for debt free retirement fades with age: study

A majority of Canadian households say that being debt free ranks just behind maintaining good health in their opinion of a happy retirement. But, their expectations for reaching that goal diminish as they age, according to a new survey by Manulife Financial.

The survey says 87 percent of households believe that "being debt-free" is important to their definition of a successful retirement -- ranking higher than having sufficient income to support their lifestyle, but below having good health.

At 30, almost all homeowners expect to be debt-free by the time they turn 60. However, homeowners in their 50s are much less optimistic, and only about one third still believe they will have debt-freedom by 60.

Nearly one-in-five homeowners in their 50s don't know when they'll be debt free and seven percent say they never expect to eliminate their debts, according to the survey.

Less than half of the respondents in their 50s expect to be debt free some time in their 60s.

What's more, about six percent of 50-year-olds surveyed don't expect to be able to retire at all.

The average Canadian household debt is $167,600, the survey says, with homeowners in their 30s carrying the highest level of debt at $189,500.

The survey comes amid growing warnings from policymakers that the record debt-to-income ratio of households may be unsustainable if interest rates rise.

Bank executives have also expressed concern about Canadians' taking on debt to support their current lifestyles.

"It's disappointing to see our use of credit in this country," Peter Aceto, President and CEO of ING Direct Canada, recently told BNN. "In the last five, six or 10 years our savings rates have gone down and our debt rates have gone up and we're starting to look a little bit like our American friends."