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The perils of debt on your retirement

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While the Bank of Canada and other policymakers fret over high levels of Canadian household debt, a new CIBC poll says the more debt products consumers hold, the harder it is to save for retirement.

Just over half of those polled say they have made a contribution towards their retirement in the last 12 months.

But the amount they put away declines as the number of debt products they hold increases, the poll shows.

For those consumers holding one debt product, the median contribution to retirement savings was $500. For consumers holding 2 debt products that number falls to $240 per month.

That figures drops to $200 a month for consumers holding 3 or 4 debt products.

"These poll results clearly illustrate the connection between good debt management and your ability to save for your long term financial goals," Christina Kramer, executive vice president, retail distribution and channel strategy at CIBC, said in a statement announcing the results.

Canadian household debt-to-income ratio hit a record 152 percent in the fourth quarter of 2011, Statistics Canada said last week.

And the Bank of Canada recently noted that high household debt levels remain the greatest financial risk in the country. Governor Mark Carney, the governor of the Bank of Canada, has repeatedly warned Canadians about their high debt levels.

Speaking to BNN in December, Carney said the time for Canadians to rein in such profligacy is now.

"We're not at some magical threshold for Canadian household debt, but the time to adjust is before you get to some threshold," he said. "The market will sometimes let you get beyond the limit for some period of time and then the constraints come and the adjustment is much more difficult."

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."

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