But a new survey suggests that’s exactly where it should be, given that 70 per cent of people polled thought they could only afford to retire if they started saving by age 25.
It may seem like a daunting task for a generation known for its high debt levels, costly tuition fees and lacklustre job prospects, but experts say that doesn’t mean it’s impossible.
“There’s so much going on when you’re a young person just fresh out of school or trying to find your own way that it’s hard to prioritize everything,” said Brett Strano, a financial adviser with Edward Jones in Mississauga, Ont.
“The challenges that are posed with that is that no one really knows how to allocate their extra cash flow.”
Only 26 per cent of those surveyed, across various age groups, said they felt they had saved enough for retirement, a figure that dropped to 20 per cent among workers with a household income of less than $100,000.
Those surveyed also said they only put nine per cent of their savings toward retirement on average, with RRSPs as the primary vehicle.
“You have a great opportunity when you’re young (to build savings) because of the compounding over a large period of time,” said Bob Stammers, director of investor education at the CFA Institute.
“The problem is you don’t have the money. Even if you didn’t have student loan debt, which most people do and they need to get rid of, and consumer debt, people are just not making as much when they start out.”
And for young people enjoying a regular paycheque for the first time, there is a strong temptation to spend.
“You want to start (saving) as soon as you can, and that’s different for everybody,” said Stammers.
“I don’t think there’s necessarily an age; I think for most people it’s going to be when they start in the working world and when they get involved with an organization that has a… (pension) plan.”
That’s exactly what Krystal Yee, 31, did after getting her first job.
While she couldn’t save much, she made a point of putting $20 into an RRSP every month.
“It wasn’t a lot but it was something and it helped me maintain a saving mentality,” said Yee.
“It’s really motivating to see my savings grow even if it was just a little bit and then, after I got out of debt, because I was already in the habit of saving money, all the money that I had earmarked for debt repayment now went into my savings.”
RRSPs are the type of investment vehicle that may allow people to save for retirement at the same time as other life goals such as owning a home, since they allow first-time homebuyers to take money out — effectively borrowing from themselves — without a tax penalty if they need the money for a down payment.
Many companies also now offer new employees a group RRSP or a defined contribution pension plan instead of defined benefit plans, which have become expensive to fund in the current low interest rate environment.
“The onus now moves to the employee to think about … where their money should be invested,” Strano said.
The survey, prepared by Vision Critical for Fleishman Hillard, was conducted online between Oct. 3 and Oct. 7, among a sample of 3,029 Canadians adults employed either full- or part-time.
The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.