Millennials feel they need to save more than any other Canadian to retire, a new survey indicates.
BMO’s annual retirement survey, released Wednesday, found Canadians ages 28 to 44 believe they will need about $2.1 million to retire, the highest among all adult generations.
The online survey also found that, for a second consecutive year, Canadians overall believe they need about $1.7 million for retirement.
Higher interest rates and inflationary pressures are impacting Canadians, with 63 per cent indicating current economic conditions are negatively affecting their ability to save for retirement, it added.
“There is no one size fits all retirement plan and no universal number when it comes to how much Canadians should be saving for retirement,” said Nicole Ow, head of retail investments at BMO.
“We encourage people to start planning early and consider all the factors that will affect their ideal retirement lifestyle including family obligations, health and wellness goals, hobbies and interests, and travel plans.”
The survey added 37 per cent of Canadians are putting less money towards retirement savings, while 38 per cent of Gen Z respondents said they are putting off saving for retirement completely.
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BMO’s retirement survey comes a week after Toronto Metropolitan University’s National Institute on Ageing (NIA) released a report suggesting only 35 per cent of Canadians over 50 who plan to retire indicated they were financially prepared to do so.
Some 39 per cent said they did not feel financially ready to retire, while 26 per cent said they’re unsure if they can afford to retire when they want to.
While the needle hasn’t moved much on overall retirement readiness from the inaugural Ageing in Canada survey a year earlier, the latest report found that older Canadians faced new pressures over the past year tied to higher borrowing rates and market volatility.
Annual inflation, though it largely cooled over the course of 2023, was still listed among the factors fuelling an economic hardship for both existing and would-be retirees.
Natalie Iciaszczyk, research program manager at the NIA, told Global News last month the rising cost of living is eating away at Canadians’ ability to save, as more of their monthly cash flow goes to daily expenses rather than long-term investments.
“Inflation has made it harder for Canadians who are still working to get by, and that makes it harder for them to be able to set money aside for the future,” she said.
Iciaszczyk added it’s not clear from the two years of NIA studies whether the financial pressures are pushing Canadians to push back their retirement age.
Another report released Wednesday by the Financial Services Regulatory Authority of Ontario suggests 81 per cent of Ontarians are more concerned about paying for basic necessities than saving for retirement. The poll also found 44 per cent said the high inflation is hindering them from starting to save for retirement.
Despite cost-of-living woes, BMO’s survey found 62 per cent of Canadians have either already contributed to their Registered Retirement Savings Plan (RRSP) in 2023 or plan to do so. The average amount people plan to contribute to their RRSP has increased to $6,512 in 2023 from $5,753 in 2022.
The survey found RRSP account values have fallen from elevated levels measured over the previous two years. The average amount held nationally fell 28 per cent to $113,070 in 2023 compared with $144,613 in 2022. Despite the decline, total account holdings are in line with historical averages, with a notable increase in retirement savings reported during the COVID-19 pandemic.
Men estimate on average they need $2 million to retire, while women believe they need $1.3 million in retirement.
Sixty-seven per cent of men said they are confident they will have enough money to retire as planned, and 56 per cent of women said they are confident they will be able to reach their retirement goals.
The average age people plan to retire is 62 years old, BMO added.
— with files from Global News’ Craig Lord
BMO’s study was conducted by Pollara Strategic Insights via an online survey of 1,510 adult Canadians, Nov. 3-8, 2023. The margin of error for a probability sample of this size is ±2.5 per cent, 19 times out of 20.
© 2024 Global News, a division of Corus Entertainment Inc.