In a recent Globe & Mail article I read “Canadians might want to stop working before the age of 65, but for the many who don’t have enough saved that retirement goal is just a pipe dream.”
That sounds rather harsh. Maybe the truth shouldn’t cut so deep. Let me explain.
In TD Bank’s recent Age of Retirement Report, the average age Canadians expect to retire at is 61 and when looking at the cohorts surveyed:
- Generation Y (ages 25 to 30) plan to retire at age 59.
- Generation X (ages 31 to 46) plan to retire at age 60.
Overall, 6 out of 10 polled said they have less than $100,000 in household financial assets not including company pensions, life insurance policies and home equity.
That sounds grave until you consider Gen Y is just embarking into their professional careers. Most 20-somethings haven’t had any time to accumulate assets, just debt, in the form of student loans and the like. Gen Y’s who don’t have any student debt (lucky them) are likely busy saving for their first home. I should know, I was there 10 years ago.
We shouldn’t be surprised at the Gen X cohort, mine incidentally. These are typically young families, learning to walk a delicate financial tightrope that includes but is not limited to:
- Meeting daily living expenses that go with raising a family.
- Paying down mortgage debt.
- Making RESP contributions.
- Making RRSP contributions.
- Making TFSA contributions.
- Paying down lines of credit and/or credit card accounts.
You don’t have to take my word for it. Robb Engen who writes for Moneyville wrote an article about this as well.
30-somethings need to juggle all sorts of financial priorities, which is really nothing new from previous generations. In your 30s, most of us have acquired more debt than equity. A mortgage is namely to blame. Hopefully by our early 40s, that paradigm has started to shift with assets outweighing liabilities.
Gen Y’s and Gen X’ers who got serious about debt and their financial plan early in life should be applauded no doubt. They are role models for “how to get it done” for the rest of us.
If you’re a 20-something or a 30-something, don’t be too discouraged by these types of reports. There is always room for better financial health. We all know that. I suggest we use these reports as a trigger to look at our own financial situation and see what can be done just a little bit better. Look forward, not down. Be optimistic, not pessimistic. Take a couple of small steps forward every month and every year.
Time is on our side.
What do you think?