Canadian Mortgage News

February 2012 National News Archive

Canadians Young and Old Want Financial Independence in Retirement: RBC Poll

Generation gap still evident in attitudes toward planning, RRSPs

TORONTO, Ontario, February 07, 2012 — Decades may separate Canada's younger generation from Boomers, but some of the attitudes of both age groups toward retirement and balancing financial priorities are strikingly similar, according to RBC's 22nd Annual RRSP Poll.

The vast majority of Canadians aged 18-34 and 55-69 say if they were to outlive their savings in retirement, the idea that their families would step in to take care of them would not be very appealing (82 per cent and 91 per cent, respectively). Similarly, a majority in each age group (78 per cent and 72 per cent) worry about balancing saving for immediate priorities with putting money aside for the longer term or retirement.

Where a gap still exists between these two generations is in financial planning:

• Six-in-ten younger Canadians do not have a financial plan, compared to nearly the same number of older Canadians who do have such a plan (59 per cent).
• Of both age groups who do have a plan, 40 per cent of younger Canadians say they have a plan "in my head", compared to 21 per cent of Boomers.
• More than half (52 per cent) of Boomers report they have their plan on paper, while just over one-quarter (28 per cent) of younger Canadians have a written plan.

"We always advise our clients to have a written plan, as this allows them to map out their progress and then take action," advised Jason Round, head of Financial Planning Support, RBC Financial Planning. "If you have a written plan, you also can share it with a financial planner or advisor and revise it as your goals change."

As the annual RRSP contribution deadline approaches, making plans for the future is more top of mind for both younger and older Canadians, but those aged 18-34 still trail Boomers in RRSP ownership and contribution rates. While 43 per cent of younger Canadians now hold RRSPs, this number still lags behind the 69 per cent of Boomers with RRSPs. Also, only 16 per cent of the younger RRSP holders are planning to maximize their RRSP contributions by this year's February 29, 2012 deadline; that percentage almost doubles (31 per cent) for older Canadians.

"We know it's difficult for younger Canadians to think about a time when they will stop working and they'll be looking to their RRSPs for income," noted Round. "Retirement seems like a very remote concept when you're just beginning your career, buying a home or starting a family. What both younger and older Canadians can visualize, however, is a future they hope to enjoy on their own terms. Building up an RRSP now - even with very small contributions - can help ensure that future."

News source: Royal Bank of Canada