TD survey finds that 78 per cent of Millennials are not saving for retirement because they don’t earn enough
According to a recent TD survey, younger Canadians have big dreams for their retirement years – whether it’s travelling, buying a vacation property or starting a business – but most recognize they’re not saving enough to turn those dreams into reality.
While more than half of Millennials (57 per cent) surveyed would ideally like to retire by the time they turn 60, only a quarter (27 per cent) think that’s a realistic possibility, with most (70 per cent) expecting to have to work well into their 60s or even their 70s, according to a recent TD survey. The survey also found nearly 60 per cent of Millennials want to take their first big trip when they’re retired, and Millennials are more likely than any other age group to want to buy their first vacation home after retiring (25 per cent vs. the national average of 13 per cent, respectively). “It’s important to start saving as early as possible to help ensure you can retire when you want and be able to live the lifestyle you’ve planned,” said Lee Bennett, Senior Vice President, TD Wealth Financial Planning. “Whatever your retirement goals may be, start by putting each of them in order of importance and assigning a timeframe, which will help you build a savings plan. Think of what you’d regret most if you couldn’t afford it when you retire and build a road map that will help get you there.”
The survey notes Canadians under the age of 34 are the least likely to be thinking about or putting money aside for retirement, with just over half (52 per cent) surveyed making contributions to their retirement savings, compared with more than two-thirds (69 per cent) of those aged 34 to 50 and 64 per cent of those in their 50s and 60s.
Linda MacKay, Senior Vice President, Retail Savings and Investing at TD Canada Trust, adds that Millennial Canadians are the most likely to say they’re not saving for retirement because they don’t earn enough or because they’re saving for other, more immediate, things. She notes that with a little bit of know-how they can start building up a retirement fund.
“Some employers may offer a form of employer-matching of contributions to a personal retirement savings plan, and younger workers should be taking full advantage of these programs as they are among the best ways to save for retirement,” said MacKay. “Canadians should also consider setting up an automated savings plan to regularly transfer funds into retirement savings accounts. A few dollars on a regular basis can quickly add up to a nice sum of money down the road.”
According to the TD survey, more than one-third (36 per cent) of Millennials don’t know whether their employer offers to match employee contributions to an RSP. And where companies do offer to match some or all of the employees’ RSP contributions, only 58 per cent of Millennials are taking part in the program, compared with three-quarters (77 per cent) of Gen-X Canadians and 87 per cent of those aged 51 and older.
“If you don’t know what retirement savings options your employer offers, you might be missing out on money that could help you to retire at a time of your choosing, so you can do the things you’ve always wanted to do,” MacKay said. “And if you find out that you don’t have a company retirement savings option there are lots of personal savings plans you can choose from to fit your budget and specific needs.”
MacKay offers the following additional tips to help you get started saving for retirement:
Set up an Automatic Savings Plan that automatically transfers funds into your retirement savings. Start with a small amount you can easily afford, and then increase it as your income goes up or your spending goes down. — If you receive a bonus or other unexpected income, it is alright to set aside a small amount to treat yourself, but you should consider putting the bulk of the extra money into your savings. — Consider which product works best for you – a Retirement Savings Plan (RSP) will help to reduce your taxable income, and the growth earned is non-taxable as long as it remains in the RSP. A Tax-Free Savings Account (TFSA) allows your savings to grow tax free, and you don’t pay taxes on the investment income or growth earned in a TFSA, even upon withdrawal. — Look for accounts with perks. For example, TD’s Simply Savefeature enables you to automatically transfer a selected amount of money into your savings account each time you use your debit card, offering an easy way to save for the future without having to change your routine. — Need some professional know-how? Talk with a financial advisor about your retirement plans and the best options to help you get there.
For more tips on how to save, or to book an appointment online, visit tdcanadatrust.com.