28% of Canadian gen-Xers have no retirement savings, survey finds

More than a quarter of generation Xers in Canada haven’t saved anything for retirement, a new survey from Franklin Templeton Investments Corp. has found.

While the 28 per cent of Canadian gen-Xers who are in that position suggests a significant gap in retirement savings, the number compares favourably to the United States. In that country, 37 per cent of gen-Xers haven’t started on retirement saving.

“With the rising cost of living — coupled with school-aged children, their own student loans or aging parents to attend to — generation X is being stretched beyond their financial limits in many cases, which hasn’t left much room for contributions to their retirement savings,” said Duane Green, president and chief executive officer of Franklin Templeton Investments Canada.

“This reinforces the importance of financial planning advice that takes retirement savings into account and incorporates tools like setting up automatic contributions — with whatever you can afford, when you can afford it — to help ensure you are better prepared for the future.

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The reasons cited by Canadian gen-Xers for not saving include income factors (47 per cent), high expenses (29 per cent) and the need to prioritize paying down debt (24 per cent). As a result, 56 per cent would consider retiring later if they don’t have enough income.

“With not enough income, high expenses and large consumer and mortgage debt loads, generation X is struggling to save,” said Matthew Williams, senior vice-president at Franklin Templeton Investments Canada.

“This may have been the case for some baby boomers, but their saving grace was that some were able to sell in a high-flying housing market and many had pensions. Generation X may not be as lucky given they have hefty mortgages that they can barely afford — especially if interest rates increase — and some do not even have home equity as they are renting.”

Gen-Xers aren’t alone when it comes to gaps in retirement savings. Even for baby boomers nearing retirement, 20 per cent haven’t saved anything for retirement, the survey found. As for millennials, (48 per cent) haven’t saved anything for retirement.

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The survey also suggests a possible role for financial advice in addressing some of the issues it uncovered. It found Canadians who haven’t retired and have an advisor are three times more likely to have saved more $100,000 for retirement than those who currently don’t have one (49 per cent versus 16 per cent).

In addition, the survey found a significant reliance on government pensions for retirement income. For example, 40 per cent of baby boomers nearing retirement expect government pensions to be their primary or secondary source of retirement income. For those who have actually retired, 51 per cent are relying on government pensions as their primary or secondary source of retirement income.

The online survey took place in January 2018 and included a sample of 2,009 Canadians and 2,002 Americans.