There are many millennials worrying about never owning a home, and this inevitably translates into worries about retirement.
KPMG recently shared the results of its Millennials and Retirement poll, focusing on the homeownership concerns young Canadians have, and they’ve now released some results pertaining to concerns about retirement.
"The financial future for millennials is vastly different from that of previous generations," says KPMG's Martin Joyce, Partner, National Leader, Human & Social Services, in a release. "They face unique challenges when it comes to building wealth despite having more education and income, primarily because of housing unaffordability.
More than half of millennials believe they’ll never be able to buy a home. In Canada, homeownership has been a staple when it comes to establishing a financial foundation for retirement. Baby Boomers and Generation X are heavily relying on their property investments when it comes time to retire. It doesn’t seem like millennials will have the same strategy.
"What we are seeing is that millennials face a choice today that their parents' generation didn't," said Joyce. "They either buy a home or focus on saving for retirement. Buying a home involves taking on considerable debt because house prices are so high in relation to incomes, and that limits millennials' ability to save. While most feel home ownership is an investment for financial stability, they worry their home will be worth less in the future."
The poll surveyed 2,500 Canadians, including 1,000 millennials aged 23-38 years old. Nearly 80% of all Canadians said that homeownership was key for retirement. Unfortunately, 65% of millennials worry that if they buy a home now, they won’t be able to save for retirement, as 42% of millennial homeowners are delaying saving for retirement in order to pay their mortgage.
If saving for retirement is being delayed, it’s not surprising that 90% of millennials plan to remain in the workforce for longer, and 84% think the retirement age will be higher than 65.
"We're concerned that millennials will not be in the same position to retire as the generations that preceded them were," said Joyce. "A variety of factors is hampering their ability to accumulate more wealth and prompting calls for government reform."
More than 80% of all age groups said more government benefits/CPP are needed to support income needs, and nearly 90% said the government must do more to protect pension plans.
A recent report from Royal LePage found that aging millennials are causing a shift in demand to detached homes. We’re curious how strong this shift will actually be if there are so many millennials who don’t even think they will ever own a home.