The majority of Canadians between ages 18 and 34 aren’t confident about their savings skills, says a BMO study.
Further, more than half (55%) says they won’t be able to match their parents’ abilities to achieve their ideal retirement lifestyle.
These findings are likely related to the fact young people are focusing on paying down large amounts of debt rather than saving for their futures. According to Statistics Canada, personal debt levels climbed to 164% in the third quarter of 2012, meaning people owe an average of $1.65 for every dollar of after-tax income they earn.
Despite their focus on debt, Gen Y is still concerned about several aspects of their retirements, however. In particular, they were worried about outliving their savings (77%), as well as their family and friends (61%).
The majority fear developing physical health problems (72%) and more than half (58%) are concerned about their mental health.
One of their biggest mistakes is relying on the Canada Pension Plan to provide the majority of their funds (94%), with 91% also depending on RRSPs. Other than those traditional sources, they expect to save with help from their employer pension plans (82%), their spouse’s incomes (72%) and through inheritances (66%).
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“On average, the CPP pays out approximately $500 a month, so [they] shouldn’t rely on it too heavily,” says Chris Buttigieg, senior manager of Wealth Planning Strategy at BMO Financial Group.
Her adds, “To maximize savings, [they need to] put away money for the long term and find creative ways to build savings. For instance, a continuous plan allows investors to make small, automatic contributions to their RRSPs directly from their bank account. [This is one] option for those who feel overwhelmed when trying to come up with a lump sum before the annual contribution deadline.”