Good afternoon, Mr. Chair.
Thank you for the invitation to appear before this committee and for the opportunity to participate in this important dialogue on income security for vulnerable seniors. This is an incredibly important issue for our country. We hope that your study, once complete, will motivate the government and all of us here to transfer your recommendations into tangible actions and results.
HomEquity Bank is a federally regulated schedule 1 bank. We are the only bank in Canada that deals exclusively with seniors. We're proud partners of CARP, the Canadian Association of Retired Persons, as well as supporters of the Royal Canadian Legion.
I'm thrilled that Wanda Morris from CARP is also on this panel. She's a tremendous advocate and expert on these issues and she'll serve as an important resource for this committee.
HomEquity Bank's 30 years of front-line experience has provided us with a unique perspective and insight into the many issues that seniors, particularly vulnerable seniors, are facing today in Canada. As you know, this Sunday, October 1, was National Seniors Day in Canada. To acknowledge the day, we launched a series of conversational podcasts titled Mindful Money to bring awareness to many of the broader issues that affect the financial well-being of Canadian seniors: managing debt, health care options, tax planning, financial planning, real estate trends, and the impact of demographic shifts on the economy. As I'm sure this committee is well aware, these broader issues are particularly acute for vulnerable seniors.
It is also important to acknowledge the changing face of seniors and aging in Canada, particularly vulnerable seniors. A vulnerable senior is not always someone in dire and desperate circumstances. In fact, we have had many clients in vulnerable circumstances who appear seemingly normal to their family and friends because they don't want to burden them with their financial problems. That is why we have long encouraged a shift in the mindset of how families should ignite these discussions and why we commend the government for undertaking this study.
Let's recall some important contexts. Canadians are entering retirement with fewer savings and more debt than ever before. Seniors are living significantly longer than in the past and the average senior is likely to have cash flow concerns within 10 years of retirement. To add some hard numbers to this context, earlier this year HomEquity Bank released a report with data sourced from Equifax Canada titled The Home Stretch: A Review of Debt and Home Ownership Among Canadian Seniors. I have provided copies of the report to the clerk in both official languages.
The results of the national study outline increasingly troubling trends. As Canada's population ages, the ability to retain and maintain a home is progressively compromised by record household debt levels, modest long-term savings, the decline of defined benefit pensions, and extended life expectancies. The data indicates that 91% of Canadians over the age of 65 say that staying at home is important, while at the same time, only 78% have any savings and investments, with 40% of those having less than $100,000 set aside for retirement. Other relevant statistics from the study are: 77% say the Canada Pension Plan is their primary expected source of income, 73% will rely on old age security, 57% have RSPs to draw upon, 48% have a work pension, and 48% have savings.
As many economists and financial planners do, I believe that home ownership should play an important part in the discussion of income security for Canadians. While the family home is the single-largest asset for most Canadians, it has often been viewed as untouchable in the past. In 2017, especially in light of significant appreciation in residential real estate values, it increasingly makes sense to unlock the equity that has been accumulated over the decades. In doing so, a home can be transformed from a passive to an active asset.
It's imperative that we empower seniors by also transforming our understanding of primary residences from passive to active assets. Allowing seniors to take advantage of the value in their home, while preserving their ability to live independently, is but one of many ways to address retirement and income security challenges. The government plays a vital role in all of this. It can ignite important public policy discussions and use its convening power to coalesce stakeholder groups to provide tangible, real-life solutions. For HomEquity Bank, these solutions include continuing the ongoing proactive dialogue about the need for early financial retirement planning, providing greater access to information about government and private-sector tools and resources that can help vulnerable seniors plan and manage their money, continuing to educate Canadians—not just seniors—about the ways to manage debt and finances strategically, supporting and raising awareness about many of the grassroots organizations that help vulnerable seniors with income security issues, and reducing regulatory burdens and red tape on businesses and banks, particularly smaller businesses and smaller banks, trying to help vulnerable seniors.
We all know that the demographics of our country are changing. It is my hope that this study continues the needed awareness-building required for Canadians to plan early on for their retirement.
Moreover, I hope this committee continues its good work while harnessing the collective power and resources of the government and industry to develop and implement policies that directly help vulnerable seniors with income security issues.
HomEquity Bank appreciates the opportunity to provide context and contribute to this ongoing discussion.