Millennials Concerned About Retirement: Is It Too Late to Save?

Concerns about retirement are mounting among millennials, according to a recent BMO survey. More than 70% of millennials express anxiety over the difficulty of retiring compared to their parents. This sentiment is echoed across generations, with 67% of respondents from all age groups sharing similar fears.

Retirement Anxiety by Generation

Retirement worries are prevalent among various demographic groups:

• Millennials: 73% believe it will be harder to retire.
• Generation X: 68% express similar concerns.
• Generation Z: 61% feel anxious about retirement.
• Baby Boomers: 60% share the same worries.

Setting Realistic Retirement Goals

According to financial planner Laura Whiteland, a prudent approach is to aim for approximately 70% of current lifestyle expenses in retirement. This rule of thumb is based on the assumption that retirement typically involves lower expenses related to employment and a more tax-efficient financial life.

However, Paul Lalonde, head of wealth planning at BMO Private Wealth Canada, notes that retirement goals should be tailored to individual aspirations. Some retirees end up spending more as they seek to enjoy their savings after years of frugality.

The Importance of Early Planning

Ben McCabe, CEO of Bloom Financial, emphasizes that retirement planning should focus on desired lifestyles rather than specific financial targets. He warns that many Canadians regret delaying their retirement preparations.

Starting small and automating savings can lead to significant long-term benefits. McCabe advises millennials and Gen Z to begin saving early, even if it’s in modest amounts.

Building Strong Saving Habits

Lalonde recommends adopting a “pay yourself first” strategy. By setting up pre-authorized savings linked to each paycheck, individuals can effortlessly build their retirement funds.

It’s advisable to explore registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) to enhance retirement preparations. Lalonde encourages maximizing contributions to these accounts for optimal growth.

Understanding RRSPs and TFSAs

• TFSA: Allows for tax-free withdrawals, but has annual contribution limits.
• RRSP: Reduces current taxable income but has restrictions on withdrawals.

Managing these accounts wisely can help optimize retirement savings based on individual financial situations.

Equity and Retirement Planning

For Generation X, home equity may be a key asset in retirement. Strategies involving home equity, such as reverse mortgages or cash flow improvements, can make retirement plans more feasible.

It’s crucial to maintain a balanced perspective on retirement expectations. As Whiteland advises, “It’s never as bad as you think and it’s never as good as you hope.”

For millennials concerned about their financial futures, proactive strategies and informed planning can lead to a more confident retirement. For more insights on personal finance, visit Filmogaz.com.