Millennials (aged 28 to 44) believe they will need about C$2.1m ($1.56m) to retire, the highest among all adult generations. For a second consecutive year, BMO reports that Canadians overall believe they need about C$1.7m in retirement.
“There is no one size fits all retirement plan. There is no universal number when it comes to how much Canadians should be saving for retirement. 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. Working with a professional BMO advisor will help Canadians put their goals into perspective. And create a personalised plan to help them achieve real financial progress and the type of retirement they aspire to have,” said Nicole Ow, Head, Retail Investments, BMO.
Despite economic headwinds, 62% of Canadians have either already contributed to their RRSPs in 2023 or plan to do so. The average amount people plan to contribute to their RRSP has increased to $6,512 in 2023 from $5,753 in 2022.
Registered Retirement Savings Plan (RRSP) account values have fallen from elevated levels measured over the previous two years.
The BMO Annual Retirement Survey reports that the average amount held nationally fell 28% to C$113,070 in 2023. This compares to C$144,613 in 2022. Despite the decline, total account holdings are in line with historical averages. There was a notable increase in retirement savings reported during the Covid-19 pandemic.
62: The average age Canadians plan to retire
Higher interest rates and inflationary pressures are also impacting Canadians. Some 63% indicate current economic conditions are negatively affecting their ability to save for retirement. Meantime, 37% of Canadians are putting less money towards retirement savings. Among the boomer generation, 44% are compensating for their reduced ability to save for retirement by working longer than they had planned. And 38% of Gen Z respondents are putting off saving for retirement completely.
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BMO reports that the average age people plan to retire is 62 years old. The ideal retirement age cited by respondents is 55 years old. For the youngest adult generation, Gen Z, the ideal retirement age is 50 years. Millennials report a slightly higher age of 53.