Canadians believe they will need $1.7 million to retire, according to a BMO Financial Group survey, but millennials expect to have to save even more before they stop working.
BMO’s annual retirement survey found that Canadians on average believe they will need $1.7 million, matching the figure in last year’s report. Millennials – those between the ages of 28 and 44 – believe they will need more, expecting to save $2.1 million in order to retire. Gen X (ages 45 to 60) and Boomers (ages 61 to 70) believe they will need $1.3 million to retire, while Gen Z (ages 18 to 27) believes they will need $1.6 million.
“There is no one size fits all retirement plan and no universal number when it comes to how much Canadians should be saving for retirement,” Nicole Ow, BMO’s head of retail investments, said in a statement.
While Canadians’ expectations for how much they need to retire remains the same as last year, the amount of money in Registered Retirement Savings Plan (RRSP) accounts has fallen from the elevated levels of savings seen amid the COVID-19 pandemic.
As people spent less and saved more through the pandemic, average RRSP account holdings jumped from $112,295 in 2020 to $141,923 in 2021, and $144,614 in 2022. This year, the figure dropped to $113,070. BMO noted that the total account holdings “are in line with historical averages.”
Higher interest rates and inflation are also affecting Canadians’ ability to save for retirement. According to the survey, 63 per cent of respondents said that current economic conditions are affecting their ability to save for retirement, with 37 per cent saying they are contributing less money towards retirement. At the same time 44 per cent of Boomers said they are compensating by working longer than they had planned, while 38 per cent of Gen Z respondents said they are putting off saving for retirement completely.
“We encourage people to start planning early and consider all the factors that will affect their ideal retirement lifestyle including family obligations, health and wellness goals, hobbies and interests, and travel plans,” Ow said.
The BMO survey of 1,510 Canadian adults was conducted online by Pollara Strategic Insights between Nov. 3 and Nov. 8 and has an estimated margin of error of +/- 2.5 per cent, 19 times out of 20.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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