Canadians are facing a growing dilemma: how to manage rising personal debt while still preparing adequately for retirement. Economic uncertainty of the last few years, combined with inflation, increased interest rates, and home prices, has made financial planning increasingly difficult for families nationwide. A recent Equifax report says the total consumer debt in Canada reached $2.56 trillion by Q4 2024, which is a 4.6% year-over-year increase. The average non-mortgage debt per consumer is now over $21,000, a signal that many people are using credit to pay for everyday expenses.
These figures are part of a broader trend that has Canadian households stretched financially. According to Statistics Canada, the household debt to disposable income ratio stood at 173.1% in Q3 2024, which means Canadians owed $1.73 for every dollar of after-tax income. While slightly lower than the all-time high reached in previous quarters, the ratio still underlines the financial strain many face.
As financial pressures mount, long-term savings goals often fall to the wayside. A February 2025 BMO survey found that more than 76% of Canadians fear not having enough money to retire comfortably. Inflation has been a big contributor to this anxiety, as the rising cost of living makes it harder to contribute consistently to retirement accounts. Meanwhile, the Healthcare of Ontario Pension Plan (HOOPP) 2024 Retirement Survey revealed that nearly half of working-age Canadians (49%) did not contribute to any retirement savings in the previous year.
“Many individuals are caught in a cycle where managing day-to-day expenses takes precedence, leaving little room for long-term savings,” says Serge Robichaud, a New Brunswick-based financial advisor with Charles St. Financial. “Even when people want to save, the financial breathing room isn’t there.”
Robichaud, who has worked in banking and independent advisory roles, believes that financial planning today must be more flexible and personalized than ever before. In his view, older methods often don’t reflect the realities of modern life, like irregular income, rising housing costs, student loans, or caregiving responsibilities.
“People need to think more deeply about their financial needs. That means understanding what you’re earning, where it’s going, and what liabilities you’re carrying. Once you have an idea, you can start making intentional choices instead of reactive ones,” says Robichaud.
One of the biggest barriers to retirement savings is housing affordability. In many Canadian cities, rent and mortgage payments consume a disproportionate share of monthly income. According to Rentals.ca, the average asking rent across Canada reached $2,127 in early 2025, with major cities like Vancouver and Toronto well above that national figure. For homeowners, the Bank of Canada’s rate hikes since 2022 have made mortgage renewals and new home loans significantly more expensive, squeezing budgets even further.
As a result, people have turned to credit cards, lines of credit, and other lending products more and more. According to figures released by TransUnion Canada last year, the average card balance per consumer has increased to more than $4,600 in 2024, and more people are delinquent in their payments. Many people are turning to credit to fill gaps in cash flow, and that kind of behaviour can get you into a cycle that makes it harder to save.
Despite these challenges, Robichaud encourages a pragmatic approach. “You don’t have to pick between paying off debt and saving for retirement. You can certainly do both in a manageable and structured manner. Sometimes it’s a matter of adjusting goals, setting smaller milestones, or automating savings in modest amounts so it doesn’t feel overwhelming.”
Robichaud stresses the importance of financial literacy. Although Canadians are generally aware of the need to save, few understand how to maximize their financial resources, get control of their interest costs or develop a diversified investment strategy. He points out that even basic budgeting tools and periodic financial reviews can help individuals gain control and reduce stress.
“Financial planning is for anyone who wants to make smarter choices with their money and avoid surprises down the line. Even a few small changes, like consolidating high-interest debt or contributing regularly to a tax-free savings account, can make a difference over time,” says Robichaud.
In recent years, there has also been a growing interest in online tools and advisory platforms, particularly among younger Canadians. While these tools can help track spending or model retirement scenarios, Robichaud cautions against relying on algorithms alone. He says meeting with a trusted advisor who understands a client’s unique life circumstances is often where the most progress is made.
As Canadians navigate a shifting financial environment, the need for clear strategies and long-term thinking is more critical than ever. Balancing debt management and retirement preparation will likely still be a challenge in the foreseeable future. However, with the right tools, guidance, and mindset, it’s a challenge that can be met with confidence and control.
