Young Canadians Not Preparing for Retirement

BMO Retirement Institute’s report, “Broadening the Approach to Preparing for Retirement,” examined attitudes on retirement among adults between the ages of 18 and 34.

On a positive note, the majority (82%) of young adults surveyed believe retirement planning is important, with more than half (52%) owning a Registered Retirement Savings Plan (RRSP) and 36% having a Tax Free Savings Account (TFSA). However, only one in 10 young adults have thought a lot about how much money they will need to save for retirement, and nearly one-third (27%) admitted they have not started saving for retirement.

“While it’s great news that young adults appreciate the importance of retirement planning, it’s a concern that many are not backing it up with concrete action,” said Tina Di Vito, head of the BMO Retirement Institute. “A clear dichotomy exists between what young people think about retirement and what they are actually doing to prepare for it.”

Attitudes and behaviors are strong predictors of financial preparedness for retirement, according to Di Vito. The report found that young adults are the least prepared for retirement, despite the fact that one-quarter of them expect to retire early. While nearly one-quarter (23%) of Boomers over the age of 55 have thought a lot about how long they might be retired, only 5% of young adults have given this a lot of thought.

Factors that may hinder their progress in establishing themselves financially, in general, let alone for retirement, include poor post-economic recession job prospects, rising student debt and lower real wages.

The report is at http://www.bmo.com/retirementinstitute.