They don't seem concerned about their financial health, says executive
Younger generations of Canadians, especially millennials and Gen Z, seem to be unconcerned about their financial health with many still not starting to save for their retirement, as reported in an article by The Globe and Mail.
A recent study conducted by IG Wealth Management in collaboration with Pollara Strategic Insights has found that 30 percent of millennials and 60 percent of Gen Z respondents have not started saving up for their retirement.
“These cohorts don’t appear to be as concerned about their financial health as we might expect, or as much as they should be,” said Damon Murchison, president and chief executive officer at IG Wealth Management.
Canadian adults (aged 18 and older) also seemed to have misconceptions about retirement, with two-thirds of them believing that savings amounting to only $1 million is enough to support them throughout their retirement. Meanwhile, a third were clueless regarding the percentage of their current income needed to cover expenses in retirement.
He suggested that developing a financial routine that included the avoidance of debt accumulation, opening of a tax-free savings account or a registered retirement savings plan (RRSP), and making small monthly contributions.
“Many put off retirement planning because they’re still paying off large amounts of debt incurred earlier in life. If young people can avoid this, saving for retirement will be that much easier,” said Murchison.
The executive also suggested looking into their budget and expenses in order to see how much they can save every month, possibly with the help of a financial advisor.
“A knowledgeable advisor can help younger Canadians create a comprehensive and personalized long-term financial plan that will allow them to reach their retirement goals, and sooner,” said Murchison.
With nearly half of respondents believing that sole focus on RRSP investments was enough to ensure their comfortable retirement, Murchison noted otherwise as investment portfolios alone were not retirement plans.
He further explained that taxes, income sources, estate planning, and decumulation strategies were important things to consider when it comes to retirement which a financial advisor will be taking into account when building a retirement plan.
“While it might seem like a long way off for millennials and Gen Z, it’s never too early to start planning for retirement,” said Murchison.
“The time to form healthy financial habits is now,” he added.