Young people apparently aren't optimistic that they'll enjoy a comfortable retirement, with 80 per cent of Canadians between the ages of 18 and 34 not very confident they can save enough money, a new poll suggests.
Many young people are focusing on paying down debt rather than saving for their golden years, said the BMO study released Monday.
The job market is extremely competitive and a lot of graduates aren't able to find work and have significant debt, said Chris Buttigieg, senior manager in wealth planning strategy at BMO Financial Group.
"So it's a lot harder to think just beyond how are they going to put food on the table versus saving for their retirement which is 30, 40 years away," Buttigieg said.
The survey found that 94 per cent of respondents between the ages of 18 and 34 believe the Canada Pension Plan will play a role in providing funding for their retirement.
"They will still need to fund their own retirement," he said, noting the CPP pays out about an average of $500 a month.
But young people did realize the need for a Registered Retirement Savings Plan. The BMO poll found that 91 per cent of those surveyed also expected to rely on their RRSPs. The deadline for this year's contribution is March 1.
Still, the survey found that 46 per cent of respondents were more concerned about paying down debt, with only one-in-four more concerned about their retirement savings. And 77 per cent feared outliving their retirement savings while almost three-quarters worried about being unable to afford the lifestyle they wanted.
"You need to start early in terms of starting to save. When you're young, time is on your side," Buttigieg said from Toronto.
Even a small amount of money in an RRSP will help, he said.
"Once you get it into the RRSP it's a contribution. So there's a refund, potentially, that could be had," he said, adding any tax refund could be used toward paying down debt.
If a young person could save just $25 a month for retirement, starting at age 25, for the next 40 years that would mean just over $37,000 at a five per cent rate of return, he said.
Over time, a young person should increase the amount saved monthly as income goes up, Buttigieg added.
Among other findings, more than half of the young Canadians surveyed thought that their parents retirement looked better than what their own retirement will be.
Buttigieg said many of their parents were more likely to retire with a defined pension plan from their employers. Only about 30 per cent of companies now offer employer pension plans, he added.
He also said retirees have to be careful not to overspend in early retirement as they embark on travel, for example.
Also in the survey, 82 per cent expected to fund their retirement from their employer pension plan; 86 per cent from other savings; 72 per cent from their spouse; and 66 per cent form an inheritance.
The online survey was conducted by market research firm Pollara between Nov. 23-27 with a random sample of 1,000 Canadians 18 years of age and older.