Millennials ignoring retirement saving

Four in ten (43%) of the affluent millennials surveyed believe they will have more than enough income when they retire, despite putting saving for retirement near the bottom of their priorities, according to the Manulife Investor Sentiment Index.

They are also less concerned (7%) than their parents and other age demographics that they will run out of money in retirement.

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The chief concern of millennial respondents is to maintain their current lifestyle (24%). For a generation known for being laden with school loan debt, one in five millennials (19%) feel that they are ahead of schedule in their current financial goals, a figure that is almost twice as much than for other age groups.

“Most millennials are more than 30 years away from retiring so they are setting themselves up for failure if they think they’ll be well-off in retirement when saving for it isn’t their chief financial concern,” said Sam Sivarajan, managing director, Manulife Private Wealth. “Millennials should be focused on paying down debt, building their savings and getting into good spending habits if they want to be financially secure in retirement.”

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Millennial respondents are three times more likely (15%) than other age demographics to indicate that saving for or purchasing another big ticket item is their chief financial concern. Millennials believe that interest rates (63%) and oil and gas prices (54%) will have the most effect on their investment strategy over the next six months.

Oil and gas concerns highest in Alberta and Atlantic Canada

More than four in 10 (44%) of Canadian surveyed said oil and gas prices will have a significant effect on their investment strategy. This is especially prevalent in Alberta (55%) and Ontario (49%).

Among national issues, survey respondents are most concerned about the cost of healthcare (76%), and oil and gas prices (73%). Concerns about oil and gas were highest in Alberta (80%) and Atlantic Canada (79%). Women (77%) expressed significantly higher concerns about oil and gas prices than men (69%).

“In Canada, data shows that the energy sector accounts for about 300,000 direct jobs and an additional 300,000 to 400,000 indirect jobs,” said Sivarajan. “That’s more than 2% of the overall Canadian workforce so the concern about oil and gas prices is understandable, particularly in Alberta and Atlantic Canada where much of the energy sector’s $200 billion in GDP is generated.

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“We can expect concerns about oil and gas prices to remain high as oil prices continue to slump below US$50 per barrel.”

Canadians investing less in ETFs and mutual funds

The survey also found that Canadians are curbing their investments in fixed income, ETFs and mutual funds (all down 4% from six month previous), while they continue to pour money into their homes and RRSPs. In fact, 93% of respondents own their own homes and 70% felt it was a good time to invest in them.

Almost one-third of Canadians say their chief financial concern is to maintain their current lifestyle. They were also concerned about running out of money in retirement and entering into retirement with debt.

More than half (52%) of respondents say they are in a better financial position than they were two years ago.

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In a separate study, Manulife’s Investor Sentiment Index shows:

Relationships with advisors – general population

• One-third of respondents (29%) have a professional advisor

• Canadians prefer to meet their financial advisors in-person (86%).
• Advisors help Canadians to manage their investments (71%) and plan their retirement (54%).
• 66% of Canadians prefer partnership with their advisors to make the final decision about their finances.
• 8-in-10 investors said that the value of their investments increased in the last three years due to recommendations from their financial advisors.

Relationships with advisors – mass affluent

• More than half of respondents (53%) have a professional advisor.

• Affluent Canadians prefer to meet their financial advisors in person (82%).
• Top areas where investors say advisors provide guidance:
  • Managing investments (77%)
  • Retirement planning (58%)
• Affluent Canadians prefer partnership relationship with their advisors to make the final decision about their finances (66%).
• 9-in-10 affluent investors said that the value of their investments increased in the last three years due to recommendations from their financial advisors.

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