Young Canadians pessimistic about retirement

Eight in 10 young Canadians are not confident in their ability to save for retirement, according to a new report.

BMO Financial Group reveals this finding in a summary of results from a survey of Canadians between the ages of 18 and 34.

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;