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Life's a bitch and then you retire. And then retirement's a bitch Add to ...

These are stories Report on Business is following Thursday, Sept. 6, 2012.

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Retirement struggles
A new survey highlights the struggle to retire comfortably in the post-crisis era.

Almost three-quarters of the people surveyed in the Canadian Payroll Association study say they have so far socked away less than 25 per cent of their retirement savings target. And half of the 2,070 employees polled are saving only up to 5 per cent of their net take-home pay, well below what the organization is the 10 per cent needed.

"This is particularly troubling when you realize that 71 per cent of the respondents are over the age of 35, with the bulk in their main savings years between 35 and 54," said CPA chair Dianne Winsor.

The survey points to just how much trouble Canadians face in saving for a decent retirement, at the same time as they are trying to cut their debt burdens after a tremendous run-up.

And one need only look at the tensions between the Canadian Auto Workers union and the Detroit Three auto makers in the current round of bargaining for a sense of how companies are holding the line in an uncertain economy.

Sixty per cent of those surveyed by the CPA say they're trying to do better in terms of saving, but more than half of those have failed. And 40 per cent aren't even trying.

There's an East-West divide here, too, the organization noted, as employees in the western and prairie provinces do better.

About two-thirds of those polled believe they will need more than $750,000 to retire comfortably.

Europe to sink deeper
Europe's prospects are growing ever worse.

The European Central Bank today slashed its projections for the 17-member euro zone, forecasting that the economy will contract by between 0.2 per cent and 0.6 per cent this year. Next year appears highly uncertain, with projections that range between a contraction of 0.4 per cent and growth of 1.4 per cent.

At the same time, the central bank is calling for higher-than-expected inflation, of between 2.4 per cent and 2.6 per cent this year, and 1.3 per cent and 2.5 per cent next.

Still, the ECB held its benchmark rate steady at 0.75 per cent, though chief Mario Draghi did unveil plans to held ease the crisis via bond purchases, which it calls Outright Monetary Transactions or OMTs, with conditions attached.

The idea is to ease borrowing costs by helping to push down bond yields of troubled countries like Spain and Italy.

"As we said a month ago, we need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area," Mr. Draghi told reporters in Frankfurt.

"We aim to preserve the singleness of our monetary policy and to ensure the proper transmission of our policy stance to the real economy throughout the area. OMTs will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," he said after announcing the rate decision.

"Hence, under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area. Let me repeat what I said last month: we act strictly within our mandate to maintain price stability over the medium term; we act independently in determining monetary policy; and the euro is irreversible."

Mr. Draghi said there was "one dissenting view" in the vote, presumably from Germany's Bundesbank. The purchases will be of government bonds with maturities of between one and three years.

"Clearly it’s going to be a struggle for the euro area to get back to even 1 per cent growth given the austerity measures that are going to weigh over the next few years," said Benjamin Reitzes of BMO Nesbitt Burns. "Indeed, risks to the outlook are on the downside even after the negative revisions."

Toronto housing market slips
The Toronto Real Estate Board says the federal government's new mortgage rules likely helped drive down housing sales in the city last month.

Sales fell almost 12.5 per cent to 6,418 in August from a year earlier, the group said today, while new listings slipped 5.5 per cent.

Average prices still climbed almost 6.5 per cent, The Globe and Mail's Tara Perkins reports.

"Stricter mortgage lending guidelines, which came into effect in July, arguably played a role," said the group's president, Ann Hannah.

"In the City of Toronto, the additional impact of relatively higher home prices coupled with the upfront cost associated with the city’s land transfer tax led to a stronger annual decline in sales compared to the rest of the [Greater Toronto Area]."

There have been particular concerns about the housing markets in Toronto and Vancouver, where sales have also slowed.

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