Retirement savings hits a generation gap

Twenty-somethings don’t have RRSPs on their minds and Canada’s banks don’t seem to care.

A recent study by the accounting firm KPMG titled, “Beyond the Boomers: The rise of Generation Y: Opportunities and Challenges for the Funds Management Industry,” found that the global investment management industry needs to increase its attention on Generation Y.

Financial advisor, Jeff Williams, says that won’t happen when another generation is getting ready to retire. “A third of the population is baby boomers and they are now turning 60,” Williams said. “They have money and they are thinking about retirement.”

The study showed that 78 per cent of the industry did not market their services to Generation Y over the past two years. Williams says financial institutions want to deal with the affluent and selling RRSPs to Generation Y is not profitable.

Aaron Landry, a 24-year-old York University PhD student, doesn’t feel the need to plan for retirement. “I assume there will be a social safety net,” Landry said. His biggest financial concern right now is funding a postgraduate trip to Greece. He worked his way through university and has no student loan debts. He admits if he ever did invest it would probably be in real estate.

“Property values increase…I don’t know anything about RRSPs,” Landry said. “I’ve never talked to a banker about it.”

Jeff Williams acknowledges the fact that young people aren’t taught about investing. “There is a lack of financial education and understanding of how valuable time can be on the value of money,” Williams said.

He says it’s not taught in schools and banks aren’t much help either. “Their mandate is to keep you less educated,” Williams said. “The less you know, the more they can take advantage of you.”

Marilyn Sweet is an exception. Her parents taught her the value of a dollar during her youth. At age 27, she already has $34,000 saved in an RRSP.

“Mom and Dad always talked to my sister and I about how important it was to save money,” Sweet said.

Sweet knows she is one of the few worried about retiring comfortably. She thinks people her age are consumer-obsessed and should be planning for old age. “It freaks me out how people spend so much …They’re more concerned with having cool things now,” she said. “People don’t think (retirement) is going to come as soon as it is.”

Landry says people his age are settling down at a later stage then previous generations. For now he won’t be running to the bank to open an RRSP—maybe after he graduates and works full time.

“I can’t imagine getting a job where I spend all my income,” Landry said. “So I’ll need to do something with it.”