Canadian Xennials Feel the Retirement Savings Squeeze
Dec 04, 2017, 06:00 ET
70 per cent of surveyed Canadians 34-40 feel overwhelmed juggling day-to-day financial obligations and saving for retirement
TORONTO, Dec. 4, 2017 /CNW/ - For Canadian Xennials1, those aged 34-40, day-to-day life is getting in the way of saving for retirement. According to a new survey from TD, three-quarters (74 per cent) of this micro generation say they would like to contribute more than they currently do, but everyday financial obligations take precedence.
Seven in ten Canadian Xennials (70 per cent) say they feel overwhelmed due to juggling other financial obligations with saving for retirement. These include common expenses such as monthly bills (cited by 60 per cent of Xennials), paying off credit cards and personal loans (44 per cent), mortgage payments (33 per cent), childcare costs (24 per cent), home maintenance costs (22 per cent), and repaying school loans (13 per cent).
"We can all have the best of intentions when it comes to preparing for retirement, but then life gets in the way and we start to feel the retirement savings squeeze," said Jennifer Diplock, Associate Vice President, Personal Savings and Investing, TD Canada Trust. "Monthly bills fall due or we are faced with a loan repayment, and that can mean we end up contributing less than we should towards our retirement."
When asked whether they agree they are too young to think about saving for retirement, there's a notable shift between those 18 -34 (42 per cent) and those 34 -40 (16 per cent).
In fact, Statistics Canada identified that 72.2 per cent of households with a major income earner aged 35 to 44 have a retirement savings plan (RSP), registered pension plan or tax-free savings account (TFSA), many are not contributing as much as they would like, with more than three quarters of Xennials surveyed by TD (77 per cent) saying they plan to start contributing or to contribute more to retirement savings in the next five years.
As a result, half of Xennials describe themselves as feeling uncertain (52 per cent) or unprepared (49 per cent) for their retirement. The survey also indicates that the stresses felt by Xennials are reflective of the experience of other Canadians. For instance, while three in five Xennials (60 per cent) point to the savings barrier of monthly bills, 62 per cent of Canadians share this concern.
"The reality is that we all have to juggle our financial commitments to find the right balance when it comes to preparing for retirement," said Diplock. "There are simple steps we can take to ease the retirement savings squeeze."
For those looking to get on with their busy lives no matter which life stage they are at, while also setting aside enough funds for retirement, TD is offering the following tips and advice:
- Work towards the retirement you want
- It may seem a long way off, but it isn't too soon to start by thinking about what you want to do in retirement. You might want to travel the world, spend time volunteering or begin a new career. Because everyone wants a different retirement, there is no one financial template to follow. Once you've set out your vision, the next step is to establish a retirement savings goal. A useful online tool is the TD Retirement Calculator which can show you how much you may need to put into savings in order to live the life you want in your retirement years.
- Save your way
- While juggling financial obligations, many people find making smaller weekly, bi-weekly or monthly RSP or TFSA contributions easier than paying a large lump sum at once. Setting up a pre-authorized purchase plan means finding the right schedule and plan for you. Peace of mind comes from knowing that you are steadily moving towards your retirement savings goal. For example, if you receive a pay raise at work or start a new job, you can increase the amount you are saving.
- Examine your expenses
- Whether it's paying back your loans or scrutinizing your monthly bills to determine essential expenses, determine how much you should pay yourself too. These are small steps we can all take to maximize the amount we spend doing the things we like most, while still saving for retirement. With its at-a-glance dashboard and real-time notifications, the TD MySpend app can give you in-the-moment insights into your spending and more control over your finances.
- The earlier, the better
- Whether or not you are a Xennial, there is no time like the present to start saving for your future. Keep in mind that the earlier you start, the more you can benefit from compound interest. With compound interest, the interest you earn is added to your principal investment, so that the balance doesn't merely grow, it grows at an increasing rate. Whether your retirement feels like a lifetime away or is just around the corner, it's important to factor in your retirement savings when planning your monthly budget. Receiving financial advice early on can help you put a sustainable saving structure in place to help keep your financial priorities and goals in check.
About the TD survey
TD commissioned Environics Research Group to conduct an online survey among a total of 2,500 adults from October 26 – November 3, 2017. To qualify for this survey, respondents had to be 18 years of age or older and reside in Canada. 558 of the respondents are classed as Xennials (aged 34-40 years).
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America. Mutual Funds Representatives with TD Investment Services Inc. distribute mutual funds at TD Canada Trust.
Xennial' was coined by writer Sarah Stankorb in 2014 and refers to a micro generation born between 1977 and 1983.
SOURCE TD Canada Trust
For further information: Julie Bellissimo, TD Bank Group, 416-965-6050, [email protected]; Cillian Murphy, Hill+Knowlton Strategies, 416-413-5029, [email protected]
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