Survey finds young Canadians unprepared for retiring early

A new study suggests nearly half of young Canadians want to retire early, but few have begun saving enough for it.

The Bank of Montreal report found that 41 per cent of those surveyed — aged 18 to 34 — expect to stop working before they hit 60 years old.

About 57 per cent plan on retiring by 69.

Tina Di Vito, head of the bank’s Retirement Institute, says these expectations are unrealistic considering 27 per cent of respondents have not tucked away any money for retirement.

Among those who had begun saving, 52 per cent had put their money into a Registered Retirement Savings Plan, while 36 per cent used a Tax-Free Savings Account.

“(Young adults) are not doing things that are absolutely necessary for them ... to start preparing for their retirement years,” Di Vito said.

Young people might not realize that the earlier they begin investing, the less they’ll need to save once they’re nearing retirement, she added.

Others may not see retirement planning as a priority.

“There is a view that retirement is far off and there are more pressing matters they have to deal with (like) finishing school, paying off student debt, buying a home, dealing with a mortgage and perhaps a young family,” she said.

But the reality is Generation Y should be more worried about retirement than their parents in the Baby Boomer generation, said Di Vito.

In the past, retirees only needed enough money to live for a few years after they stopped working. Now, as more people live into their 80, 90s and beyond, the younger generation needs to make sure they have enough money for these extra years, she said.

Employers who offer defined-contribution pension plans — guaranteeing retirement payout — are also more rare nowadays, forcing people to rely more on their individual investments in retirement.

The vast majority of young people surveyed agreed that retirement planning and important, but only 23 per cent have spoken with a financial planner about their futures.