Younger Canadians show us they know how to save: HOOPP survey

We’re often led to believe that younger Canucks are more focused on the “now” than they are on their distant, decades-from-now retirement.

But new research from the Healthcare of Ontario Pension Plan (HOOPP) shows that young folks are dialed in on retirement saving, reports Wealth Professional.

Half of those aged 18-34 “have set aside money for retirement in the past year,” the publication reports, adding that 45 per cent of those in that age bracket have yet to start filling their retirement piggy banks.

Why, we may ask, is this the case?

“Perhaps this is because young Canadians are already concerned that their idea of when they will stop working is already being impacted by current inflation pressures,” Wealth Professional tells us. “While 60 per cent of all respondents believe they may have to delay retirement, among the youngest adult group the figure jumps to 74 per cent. That puts them second behind 35-54s (80 per cent) but well ahead of the pre-retiree 55-64-years group (54 per cent).

So our younger friends are also reeling from the impacts of inflation?

Wealth Professional explains it this way.

“The retirement fears of young adults may be driven by a wider concern about the state of their finances,” the publication reports.

“The survey found that half of the 18-34 group say they are living beyond their means (compared to just 31 per cent of over 35s) and are almost twice as likely to be splurging on small luxuries because they can’t afford big ticket items (54 per cent versus 28 per cent of over 35s said this),” the article continues.

The younger set are most worried, Wealth Professional notes, by “the cost of daily life (69 per cent),” following by inflation (67 per cent) and housing affordability (65 per cent).

Then, we have their level of debt (48 per cent), reducing that debt (83 per cent), whether they will ever have a workplace pension (45 per cent), interest rates impacting their savings ability (91 per cent), and saving for retirement (86 per cent), Wealth Professional continues.

Finally, 43 per cent are worried about the cost of owning their own home in the future, the article concludes.

The takeaway here is that despite all these barriers, more than half of young people are making the effort to save for retirement. That’s good news.

This writer first started saving for retirement at age 25, when a friend pointed out that contributions to a registered retirement savings plan (RRSP) were tax-deductible. “You’ll get a refund,” our friend said. So, awesome, we started contributing to an RRSP nearly 40 years ago and continue to do so to this day.

Our late Uncle Joe always told us to pay ourselves first — put something away for yourself on payday, then pay the bills. Tucking dollars into a retirement account is a great way to achieve this goal.

And if you’re worried about ever having a retirement program at work, don’t. Any Canadian with RRSP room can join the Saskatchewan Pension Plan . You can leave the intricate art of investing to SPP — your focus can be on directing dollars to your retirement nest egg. When the time comes to give back the lanyard and pass, SPP will have invested your savings for you, and you’ll be presented with options for turning those savings into retirement income.

Be sure to check out SPP today!

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By Sheryl Smolkin

Call it semi-retirement, phased retirement, an encore career or a second act career. It all amounts to the same thing. And a new global survey from HSBC shows it is a growing international trend.

The reality of retirement is evolving and semi-retirement – working fewer hours and/or changing jobs – is becoming more widespread. Traditionally, retirement meant a sudden switch from a busy full-time work routine to a more relaxed lifestyle. Many of today’s working age people are seeking a more gradual transition to life after work.

Easing into full retirement
While only 17% of Canadian retirees semi-retired before fully retiring, almost half (45%) of working age people are planning to ease into retirement before they stop work completely. A similar proportion (40%) expect to switch straight from their current job and working hours to full retirement and 15% expect that they will never be able to fully retire.

There are differences between men and women, with more men (42%) planning to move immediately from their current job and working hours work to full retirement than women (38%). Those closer to retirement (aged 45+) are more likely to believe they will never retire (20%) compared to those aged 25-44 (12%).

The life of a semi-retiree
Almost three in five (57%) of those working age people planning to semi-retire want to stay in the same job but work fewer hours, while just over a third (35%) are planning a change in career as well as reduced hours. A significantly smaller proportion (8%), plan to semi-retire by changing career but working the same hours.

Men are more likely than women to favour staying in the same job but reducing their hours. More than three in five (62%) men plan to do this compared to just over half (53%) of women. Conversely, 37% of women plan to change jobs and work fewer hours, compared to 32% of men.

Choice or necessity?
The graph below illustrates the reasons why Canadian retirees who initially semi-retired made the decision to do so. It is interesting to note that only 18% said they semi-retired for health reasons and 12% said they could not afford to fully retire.

Why did you move from working full-time into semi-retirement? (Base: All who semi-retired)
18%: To reduce stress
38%: Didn`t want to retire full time immediately
37%: Keep active/ keep my brain alert
35%: Like working
26%: Wanted an easy transition into retirement
28%: I no longer needed to work full time
20%: It was something I planned and was able to do
18%: Health reasons/physical demands
17%: To maintain a comfortable lifestyle
12%: Cannot afford to retire

You can’t take it with you 
When asked whether it is better to spend all of your money or save as much as possible to pass on to the next generation, the majority (66%) of working age Canadians take a balanced view, believing that it is better to spend some money and save some to pass on.

However not everyone agrees. More than one in five (21%) working age people believe that it is better to spend all your money and let the next generation create their own wealth. Comparatively few (13%) agree that it is better to save as much money as possible to pass on to the next generation.

Attitudes towards spending and saving vary from country to country. Over a quarter of pre-retirees in Hong Kong (28%), Canada (27%), the UK (26%) and Australia (26%) say that it is better to spend all your money and let the next generation create its own wealth.

In contrast, fewer working age people in Mexico (12%), the UAE (15%) and Indonesia (16%) agree that it’s better to spend all your money.

Also read: Will you be working at 66?