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Planning for the Future

Millennials ignoring saving for retirement, says survey

Canadians put cost of healthcare, and oil and gas prices at the top of their concerns

Toronto - Four in ten (43 per cent) of the affluent millennials surveyed believe they will have more than enough income when they retire, despite putting saving for retirement near the bottom of their priorities, according to the most recent Manulife Investor Sentiment Index. They are also less concerned (seven per cent) than their parents and other age demographics that they will run out of money in retirement.

The chief concern of millennial respondents is to maintain their current lifestyle (24 per cent). For a generation who is known for being laden with school loan debt, one in five millennials (19 per cent) feel that they are ahead of schedule in their current financial goals, a figure that is almost twice as much than for other age groups.

"Most millennials are more than 30 years away from retiring so they are setting themselves up for failure if they think they'll be well-off in retirement when saving for it isn't their chief financial concern," said Sam Sivarajan, VP & Managing Director, Manulife Private Wealth. "Millennials should be focused on paying down debt, building their savings and getting into good spending habits if they want to be financially secure in retirement."

Millennial respondents are three times more likely (15 per cent) than other age demographics to indicate that saving for or purchasing another big ticket item is their chief financial concern. Millennials believe that interest rates (63 per cent) and oil and gas prices (54 per cent) will have the most effect on their investment strategy over the next six months.

Oil and gas concerns highest in Alberta and Atlantic Canada

More than four in ten (44 per cent) of Canadian surveyed said oil and gas prices will have a significant effect on their investment strategy. This is especially prevalent in Alberta (55 per cent) and Ontario (49 per cent).

Among national issues, survey respondents are most concerned about the cost of healthcare (76 per cent), and oil and gas prices (73 per cent). Concerns about oil and gas were highest in Alberta (80 per cent) and Atlantic Canada (79 per cent). Women (77 per cent) expressed significantly higher concerns about oil and gas prices than men (69 per cent).

"In Canada, data shows that the energy sector accounts for about 300,000 direct jobs and an additional 300,000 to 400,000 indirect jobs," said Sivarajan. "That's more than two per cent of the overall Canadian workforce so the concern about oil and gas prices is understandable, particularly in Alberta and Atlantic Canada where much of the energy sector's $200 billion in GDP is generated.

"We can expect concerns about oil and gas prices to remain high as oil prices continue to slump below US$50 per barrel."

Canadians investing less in ETFs and Mutual Funds

The survey also found that Canadians are curbing their investments in fixed income, Exchange Traded Funds, and mutual funds (all down 4 per cent from six month previous), while they continue to pour money into their homes and RRSPs. In fact, 93 per cent of respondents own their own homes and 70 per cent felt it was a good time to invest in them.

Almost one-third of Canadians say their chief financial concern is to maintain their current lifestyle. They were also concerned about running out of money in retirement and entering into retirement with debt.

Financial Readiness

More than half (52 per cent) of respondents say they are in a better financial position than they were two years ago.

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