Wait, what? Canadian millennials are actually optimistic about their retirement? This finding from a new survey is surely surprising to many financial professionals because millennials have been known for years to be sour on the whole concept of retirement in their winter years.
According to a new study from the Bank of Montreal (BMO), released on the 28th of January, nearly half of Canadians under the age of 34 are optimistic about having the ability to afford their ideal retirement. This is more than the one-third of Baby Boomers who feel the same way.
Just how much do millennials think they need for the perfect retirement? This age group cites an average of $442,000 as the right number, while Baby Boomers say they need $385,000. Millennials currently have an average of $15,194 saved for retirement while boomers have an average of $65,394.
However, both demographics are frightened by the future prospects of not having enough money saved and declining physical abilities. In today’s environment of record-low interest rates, rising healthcare costs and rampant price inflation, their concerns are justified.
"Considering how much time Millennials have to save for retirement, their confidence in their ability to reach their target makes sense," said Chris Buttigieg, Senior Manager of Wealth Planning Strategy at BMO Financial Group, in a statement. "However, they should definitely take heed of any lessons learned from their parents on what works and what doesn’t with saving for retirement. They should also make sure that they have a financial plan that will help keep them on track."
When it comes to retirement concerns, both millennials and boomers share the same worries. Aside from the aforementioned paucity of savings and poor physical health, they’re also cautious about spending more than they initially planned and being bored.
Although boomers are a lot more pessimistic about retirement since they are closer to it, 32 percent of those in this age group is in anticipation and excited about retiring, which is, again, more than the 22 percent of millennials who reported the same feelings about their winter years.
"Millennials and Boomers generally share similar concerns at the prospect of being retired," added Buttigieg. "While it’s not as easy to control deteriorating health and physical capacities, you can take charge of your financial future and be well-prepared for retirement from a fiscal standpoint. One of the best ways to do so is to meet with a financial professional who can help establish a financial plan and save for retirement on a regular basis - this will help provide confidence that you have been pro-active in preparing for a financially secure retirement."
What many may find interesting from this study is the fact that it’s contrary to previous results. Previous reports seemed to indicate that millennials had foregone the concept of retirement altogether and were quite jaded about the entire idea. Most doubting that they will ever be able to retire at all.
In fact, one poll found that a large number of people expect to work until they’re buried six-feet under the ground.
Financial experts often recommend that the best way to have a hefty sum for retirement is to incorporate these five steps into one’s life:
Save and invest early
Pay off debt quickly
Live within your means
Plan for retirement now
Reduce your tax bill now and in retirement
The online poll was conducted with 1,303 adult Canadians between Nov. 12 and Nov. 17, 2014. It contains a margin of error of +/- 3.5 percentage points.