Boomer generation wants to be financially independent in retirement
TORONTO, Jan. 27, 2015 /CNW/ - While a majority (72 per cent) of younger Canadians aged 18 to 34 say they owe it to their parents to keep them comfortable in retirement, a higher majority (76 per cent) of their parents' Boomer generation (aged 50-69) doesn't want this "IOU", according to the 2015 RBC Financial Independence in Retirement Poll.
Part of the reason for this older generation's view may be due to their belief that, by comparison, their children's generation faces more financial pressures (61 per cent) and is less prepared for retirement (59 per cent). This, despite the fact that one-third (37 per cent) of Boomers who have determined how much they need to retire comfortably estimate they are presently somewhat short of - or even nowhere close to - where they thought they would be financially in terms of their retirement savings.
"We're seeing a strong desire among Boomers for financial independence in retirement coupled with uncertainty around how they will accomplish this goal," noted Richa Hingorani, senior manager, Financial Planning Support, RBC Financial Planning. "This is where a conversation with a financial planner is so important, to help you explore all the options available to help you achieve the lifestyle you're hoping for in retirement."
This year's survey, based on findings within the 25th Annual RBC RRSP Poll, also found contrasting opinions between younger and older Canadians around the importance of RRSPs. For those aged 18 to 34, RRSP ownership dropped to 36 per cent - its lowest level in more than a decade and well below 67 per cent for the 50 to 69 age group.
"We understand that younger Canadians have many competing financial demands in their lives which may make it difficult for them to focus on RRSPs and retirement savings. They also have other options, such as TFSAs, to help them grow their savings," added Hingorani. "We also know, however, that RRSPs continue to be one of the best ways to save for retirement. A distinct advantage of RRSPs for young people to consider is that the sooner you can get your RRSP started - no matter how small your contributions - the greater the opportunity you have to grow those savings significantly by the time you are ready to retire."
Other generational differences around retirement savings identified in this year's poll:
- Younger Canadians (48 per cent) are more likely to say that having enough savings is one of their top concerns in retirement, compared to Boomers (38 per cent).
- Younger Canadians are more worried about balancing immediate savings with long term/retirement savings than Boomers (80 per cent versus 70 per cent respectively).
- Younger Canadians with unused RRSP contribution room are more worried about the impact this may have on their retirement (39 per cent) compared to Boomers with unused RRSP contribution room (22 per cent).
- More Boomers (38 per cent) are making one-time contributions to their RRSPs, compared to younger Canadians (18 per cent); younger Canadians are using regular contribution plans more than Boomers (42 per cent versus 23 per cent respectively).
About the 2015 RBC Financial Independence in Retirement Poll
These are some of the findings of the 25th Annual RBC RRSP Poll conducted by Ipsos Reid from November 3 to 17, 2014 on behalf of RBC Financial Planning. For this survey, a sample of 3,205 Canadians ages 18+ from Ipsos' Canadian online panel was interviewed online. Quota sampling and weighting are employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ± 2 percentage points had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
About RBC's financial planning advice, resources and interactive tools
Canadians can access RBC Financial Planning and rbc.com/savingsspot for free planning, budgeting and savings advice and resources, or to find the nearest Investment and Retirement Planner. The RBC Advice Centre offers free online advice, resources and tools, including RRSPs and the RSP-Matic Savings Calculator. For Canadians who want to get more from their day-to-day banking, protect what's important, save and invest, borrow with confidence or take care of their businesses, the RBC Advice Centre can help answer their questions.
For further information:
Kathy Bevan, RBC Communications, 416-974-8820