A report finds that the majority of generation X and Y Canadians are confident they’ll be able to save enough for retirement even though many of them haven’t begun saving for their golden years.

According to the BMO Wealth Generation: The Financial Challenges for Generations X & Y report, 65% of those surveyed had some level of confidence that they will be able to retire comfortably when they choose.

In fact, 26% of generation Y Canadians are very confident of retiring comfortably, yet only 17% of generation X and 16% of the baby boomers have the same high level of optimism.

However, generation Y does not use or have access to the most popular retirement savings vehicles to the same extent as either generation X or the baby boomers.

Fourteen percent of generation Y said that they were not saving for retirement at all, compared with only 10% for generation X and 6% for baby boomers.

The report notes that some of the difference can be explained by the fact that many employers no longer offer DB plans to their newer employees. There’s also greater employment mobility, so fewer younger employees are qualifying for company pensions.

Also, generations X and Y plan to retire two years earlier than the average baby boomer (at 61.7 years of age rather than at 63.7 years of age).

The combination of saving less for retirement, less access to company pensions, a planned earlier retirement age, ongoing education savings and increased costs for basics such as food and housing leave both generations “with a much lower probability of achieving their retirement goals than the baby boomer generation before them,” the report notes. “The end result is that it is very likely that generation X and generation Y will have to save more efficiently and work more years than the baby boomers did.”

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Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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