Nearly half of Canadian millennials (49%) say the cost of living is their biggest barrier to saving for retirement
MISSISSAUGA, ON, November 16, 2022 /CNW/ – Edward Jones Canada has released a new study that examines retirement savings habits. Research has found that millennials (aged 26-41) are more likely than other generations to be behind when it comes to saving for retirement. In fact, 70% of respondents in this cohort are not saving enough for their retirement, and 27% cannot afford to do so at all.
While all Canadians are feeling the effects of prolonged economic volatility, with half (52%) saying the cost of living is the biggest barrier impacting their ability to save enough for retirement, millennials are more likely than other generational cohorts cite their debts (21%), employment and employment status (13%) and lifestyle (9%) as the most important barrier.
“We continue to see a decline in employer-sponsored defined benefit pension plans and as a result, saving for retirement has become a personal responsibility for Canadians,” said Julie Petrera, Senior Strategist, Customer Needs at Edward Jones Canada. “This is a challenge, especially for millennials who face multiple barriers that impact their ability to save for retirement. It’s so important to have a financial strategy in place that helps them overcome these obstacles to get them on the right track and keep them on track. “
Millennials are ushering in a new approach to personal finance
Millennials are much more likely to agree that saving for retirement is a lower priority than other financial goals, such as paying off debt, buying a home or starting a family. In fact, 66% of millennials agree they prioritize other financial goals, compared to 46% of Gen X (42-57) and 40% of baby boomers (58-67).
This short-term approach to financial priorities is a long-term strategy for most millennials, who are also more likely than other generational cohorts to delay retirement in favor of their lifestyle. Almost three-quarters of millennials (72%) agree they would delay retirement if it meant maintaining their ideal pre-retirement lifestyle. Despite this, 38% of millennials say they would prefer to retire before the age of 65.
According to another recent study by Edward Jones in partnership with Age Wave, this approach can be substantial. As the life expectancy in Canada continues to rise, respondents said their ideal length of retirement was 27 years. With nearly three decades of retirement to save, those in or about to retire admitted to starting saving for this new chapter in life at age 37 on average, but wishing they had started closer to a decade earlier (28 years).
Once retired, millennials are more likely than other generational cohorts to value being active in retirement rather than using it as a time to rest and relax. However, they are much less interested in working for pay (22%) than those aged 55 and over (45%). Older Canadians (55+) are also more likely to want to volunteer in some way (26%), while Millennials are more likely to donate their money to support friends or family members in need (25%).
While there are generational trends that are changing the retirement landscape and will likely continue to evolve, the desire for peace of mind remains a constant for Canadians, with two-thirds of Canadians (63%) indicating that don’t want to worry or worry less about their finances in retirement.
“The data points to generational shifts in retirement values and priorities, which are influenced by many different factors such as the changing economic environment that impacts our daily lives,” Petrera said. “When, where and how younger cohorts retire have changed, and so a traditional approach to saving for retirement may not work for them. As personal finances continue to evolve, your financial strategy should reflect what matters most to you. It’s as simple as that.”
The referenced data comes from an online survey of 1,022 Canadian adults aged 18 or older. Surveys have been conducted by Pollara Insights on October 25, 2022. A representative sample of this size would be considered accurate to within ±3.1%, 19 times out of 20. Results were weighted using the latest Statistics Canada data to be representative of the Canada population as a whole.
About Edward Jones Canada
Edward Jones is a full-service investment broker that offers a range of investment products, services and solutions to retail investors. We have nearly 850 financial advisors serving clients in Canadian communities from coast to coast. Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, the company is also a participating organization on the Toronto Stock Exchange. Edward Jones is a proud supporter of health and wellness partners such as the Terry Fox Foundation, whose mission supports initiatives that have a positive impact on cancer research. For more information, visit edwardjones.ca.
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