Canadian baby boomers, Generation X and millennials alike are struggling to stow away enough money to fund their retirement goals.
Canadians, on average, expect to retire at the age of 63 and estimate that they will need an average of $756,000 in retirement savings to do so, according to the 2018 Retirement Savings Poll conducted on behalf of Toronto-based Canadian Imperial Bank of Commerce (CIBC).
However, the vast majority (90%) don’t actually have a financial plan that will help them achieve their lifestyle goals. Notably, more than half of Canadians surveyed (53%) are not sure if they’re saving enough money and 37% aren’t able to save or haven’t considered their retirement in the first place.
“If you don’t have a retirement plan, you’re throwing darts at numbers in the dark, guessing at how much you’ll need to live on comfortably once you’ve stopped working,” says Jennifer Hubbard, managing director of CIBC Financial Planning and Advice, in a statement.
“It’s important to take an honest look at your finances today, and determine ‘what’ your retirement goals and dreams are because that will influence ‘when’ you retire and ‘how much’ it will cost,” she adds. “That way, you can find the best path to get from here to there.”
Millennials expect an even greater difficulty saving for retirement than their older counterparts. Specifically, millennials aged 18 to 34 believe they’ll need approximately $917,000 in savings to retire, the CIBC poll says. This is a significant contrast to the savings expectations of Gen X ($842,000) and boomers aged 55 and up ($518,000).
Despite the need for greater savings, only 38% of millennials aged 25 to 34 are putting money toward their retirement, according to Toronto-based Royal Bank of Canada’s (RBC) annual Financial Independence in Retirement Poll.
Although few millennials appear to be saving for retirement, the poll reveals that almost half (46%) consider it a top financial priority.
The RBC poll also shows that millennials may not be making the most of savings vehicles available to them. For instance, 50% of millennials don’t have RRSP account. When considering whether to contribute to an RRSP or a TFSA, 48% opted for a TFSA while less than one-third (30%) chose an RRSP.
“TFSAs offer a great savings vehicle, but millennials can’t overlook RRSPs, particularly as they move into their 30s,” says Richa Hingorani, senior director of digital strategy at RBC Mutual Funds Distribution and RBC Financial Planning,” in a statement.
“While retirement can seem so far away for these younger Canadians, we want them to know that time can work in their favour,” she adds.