A survey of Canadian homeowners suggests a good percentage of them are in for a rude awakening when it comes to how much debt they're going to be carrying during their theoretical retirements.

In a survey of 2,373 homeowners across Canada conducted in September and released Monday by Manulife Bank of Canada, more than a quarter of respondents said they would still consider themselves to be debt free, despite having various types of debt.

Twenty-seven per cent said they would consider themselves to be debt-free even if they had a mortgage. Almost as many, 23 per cent, said they'd consider themselves debt-free even if they still owed money on a car loan. And 11 per cent said they would consider themselves debt-free despite keeping a balance on a line of credit.

Manulife said the survey shows that not everyone has the same definition of what it means to be debt-free.

"Saving for retirement and paying down debt are both important goals — but they both draw from the same pool of money," Manulife president Rick Lunny said in a release.

Home as 'fallback plan'

The replies are especially interesting considering 83 per cent of respondents said that being debt free was "very important" to them in order to have what they considered a successful retirement.

Only about half of respondents said they were confident of achieving a debt-free status in time for retirement. Confidence was lower among people in their fifties, who were the closest to the retirement age. Those who were a little younger, in their forties, were more confident in being able to have a debt-free retirement.

Considering that the survey looked only at people who own homes, it is perhaps not surprising that almost a fifth of them said they planned on accessing at least some of the equity locked in their homes to supplement their incomes in retirement.

About 10 per cent said they planned to live in their homes but borrow against them in retirement. Another eight per cent said they planned on accessing that money by downsizing to cheaper housing.

"Often homeowners think of their home equity as a fallback plan for retirement income," Lunny said. "The fact that one in five is proactively planning to use this strategy suggests they may be struggling to balance retirement saving with debt repayment."

The survey was limited  to homeowners aged 20 to 59, who had an annual income of at least $50,000. It was conducted in September by polling firm Research House on behalf of Manulife Bank of Canada.

Because it was an online poll, there is no equivalent to the margin of error that would apply to a telephone based random sampling.