Rosalind Evans
During an economic climate marked by high-interest rates and inflation, Canadian millennials face an unprecedented financial challenge regarding retirement planning. According to BMO’s annual retirement survey, millennials between 28 and 44 estimate they will need a staggering $2.1 million to retire comfortably, a figure that dwarfs the national average of $1.7 million believed necessary by Canadians across all adult generations.
The survey’s findings underscore the growing anxiety among younger Canadians, who grapple with the dual pressures of current economic hardships and the daunting task of saving for retirement. “It’s a daunting number for people who are just entering the workforce, who maybe have just graduated from university, with debt or without debt, and to have to visualize the average dollar amount of $1.7 million for retirement,” Lianne Di Rocco, a portfolio manager at BMO Nesbitt Burns, articulates the palpable concern among young workers. Yet, Di Rocco offers hope, suggesting that early financial planning can mitigate these concerns, emphasizing, “It doesn’t have to be as daunting a retirement plan if you’re starting younger versus older.”
Compounding the issue, the survey revealed that many Canadians are reducing their retirement savings, with 38% of Gen Z respondents (ages 18 to 27) postponing retirement savings altogether. This trend is alarming in light of another report from Toronto Metropolitan University’s National Institute on Ageing, which indicates a mere 35% of Canadians over 50 feel financially prepared for retirement.
These financial pressures are further highlighted by Natalie Iciaszczyk, research program manager at the NIA, who points out the dire impact of inflation on Canadians’ ability to save. “Inflation has made it harder for Canadians who are still working to get by, and that makes it harder for them to set money aside for the future,” she stated, reflecting on the broader economic challenges facing Canadians today.
Despite these challenges, there’s a silver lining: 62% of Canadians are contributing or planning to contribute to their Registered Retirement Savings Plan (RRSP) in 2023, with an average contribution amount on the rise. This indicates a resilience among Canadians to continue investing in their future despite the prevailing economic headwinds.
As millennials navigate the complexities of modern-day financial planning, the $2.1 million retirement figure is a stark reminder of the importance of early and consistent saving. The journey to a secure retirement is fraught with challenges. Still, with prudent financial management and a proactive approach to saving, the dream of retirement remains within reach for the millennial generation.
