More than a third of people younger than 35 think they’ll retire before they turn 60, a report released Wednesday by the BMO Retirement Institute found, but a quarter haven’t started saving.
The report, “Broadening the Approach to Preparing for Retirement,” found 88% of respondents between ages 18 and 34 said retirement planning is “important” and 60% say it’s “interesting,” but only 45% are currently saving in a traditional or Roth IRA. Thirty-seven percent are members of a company pension plan, and 46% say they have other savings, like savings accounts and mutual funds. Twenty-five percent of respondents are not saving at all.
Just 21% said they’ve spent some time thinking about how much they’ll need for retirement.
“There is an obvious dichotomy between what young people think about retirement and what they’re actually doing to prepare for it,” Tina Di Vito, head of the BMO Retirement Institute, said in a statement. “While it’s encouraging that young adults appreciate the importance of retirement planning, there’s clearly a disconnect between the concept and then putting the tangible pieces in place, such as determining how much money you’ll need and starting to save. This is especially concerning given that so many expect to retire before the age of 60.”
By comparison, just 3% of respondents over 55 said they’d retire before they were 60. The majority, 65%, said they would retire between age 60 and 69, compared with 57% of young adults. While a third of boomers said they would work past age 70, just 8% of young adults expect to work so long.
The report notes that young adults’ long time frame to retirement will “require a special approach” to encourage planning.
The report found young people frequently turn to their family and friends for financial advice, and 38% take action as a result. Although 81% of young adults said they’ve talked to someone about their finances, only 21% have spoken with a financial professional.
More professional education, such as retirement planning seminars, are less effective. Although 34% of respondents said they attend seminars, just 28% said they’ve taken action as a result of what they learned there.
In addition to trying to plan for a retirement that is many, many years away, young adults are also struggling with challenges like high student debt, long job hunts and lower wages than older generations enjoyed. “This could potentially translate into years of lost lifetime income, which could place young adults at a significant risk of not saving enough for retirement,” according to the report.