Eight in 10 young Canadians are not confident in their ability to save for retirement, according to a new report.
The survey shows that 80 percent of Canadians in this age group lack confidence in the ability to save for retirement. And more than half (55 percent) think they will either be unable or just equally able to achieve their ideal retirement lifestyle, compared to their parents’ ability to do so.
The report attributes the pessimism to the fact that many young people are focusing more on paying down debt than on saving for retirement. According to Statistics Canada, personal debt levels climbed to an unprecedented 164.6 percent in the third quarter of 2012, meaning Canadians owe an average of $1.65 (CDN) for every dollar of after-tax income they earn.
The BMO study also finds that almost half (46 percent) of young Canadians are more concerned about paying down debt than saving for their retirement, with only 24 percent more concerned about their retirement savings.
When asked about their biggest concerns regarding retirement, the survey respondents identify the following:
Seventy-seven percent fear outliving their retirement savings, and 61 percent fear outliving their spouse, family and friends;
Seventy-two percent fear developing physical health problems, and 58 percent fear developing mental health issues;
Seventy-two percent worry about being unable to afford the lifestyle they want in retirement.
An overwhelming 94 percent of young Canadians believe the Canada Pension Plan will play a role in providing funding for their retirement. Ninety-one percent also expect to rely on their Registered Retirement Savings Plans (RRSP).
Others think they will get the money from:
Their employer pension plan (82 percent);
Retirement income from their spouse (72 percent);
Other savings (86 percent);
An inheritance (66 percent).