Millennials: are you seriously never going to retire?
A recent analysis, You’re never going to retire – and here’s why, posted in CBC Business, October 24, 2016 was pretty depressing. It basically stated that Millennials are never going to retire.
Millennials are prone to job-hopping , “More than half of Canadians stay in a job for less than two years. The U.S. Bureau of Labour Statistics says the average worker holds 10 different jobs before the age of 40.” We do not follow the traditional path of education, work, retire (with pension). (source: You’re never going to retire – and here’s why, CBC Oct. 24, 2016)
In fact, “about 47 per cent of Canadians currently have no employer pension, and even fewer younger workers have employer pensions.” (source: Retirement? Few Canadians without an employer pension plan have enough money, study says, CBC Feb 16, 2016 )
We are living longer, increasing the amount we actually need to save, without ever actually saving.
Millennials may also have unrealistic expectations about how much they will receive from the government in retirement. In actuality, CPP and OAS amount to an average of only $15,970 annually for singles and $25,746 for couples. (source: Retirement? Few Canadians without an employer pension plan have enough money, study says, CBC Feb 16, 2016 )
If you are accustomed to living on a double income of $60,000+ annually you will face a dramatic drop in standard of living in retirement. Retirement, to many, is supposed to represent a comfortable existence, possibly a few holidays, and making time for all of the things you couldn’t do while you worked – not existing in poverty unsure of your financial future.
“The Broadbent Institute …found not only are we living longer, we are saving less. Among those age 55 to 64 without access to a company pension, about half have less than half of what they'd need to pay their bills. A staggering 32 per cent have less than $1,000 in retirement savings.” (source: You’re never going to retire – and here’s why, CBC Oct. 24, 2016)
As people work longer (as a result of having saved less) Millennials also face the bleak aspect of being forced out of work, “It won't be an option for many younger Canadians, … Many of them will be forced into [semi-retirement] in order to reach a more reasonable replacement ratio." (source: You’re never going to retire – and here’s why, CBC Oct. 24, 2016)
So , after that disheartening news…what can you do?
The answer is to start now, not tomorrow, not five years from now, ideally, yesterday.
Create your own retirement plan irrespective of a company pension.
Plan to save enough to last you through retirement. This may mean waiting longer to retire, and saving more to cover your expenses past 90 years of age.
If you do not have a retirement savings plan in place, establish one. You can do so by talking to a financial advisor. They can assess your needs and help you decide what investment vehicle best suits your life-situation (be it a TFSA, RRSP or other non-registered account). They can help you set-up regular contributions and navigate the occasionally boring, sometimes intimidating world of finance.
Brooklyn Scott is a Financial Advisor/Mutual Funds Representative for Lewis & Jones Group/Desjardins Financial Group/Desjardins Financial Security Investments Inc. in Killarney, Manitoba.
Mutual funds are distributed through Desjardins Financial Security Investments Inc. For insurance products, Desjardins Financial Security Investments Inc. acts as a national insurance brokerage agency.