Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Canada’s most-awarded
newsroom for a reason
Stay informed for a
lot less, cancel anytime
“Exemplary reporting on
COVID-19” – Herman L
per week
for 24 weeks
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Jessica Hand and Mike DesRoches play with their daughter and dog in Winnipeg on Saturday.


Jessica Hand and Mike DesRoches are juggling numerous financial goals, but saving for retirement is one ball they've had to let drop over the last year.

"The biggest reason is we've got no money left to save at the end of the month," says Ms. Hand, 30, an administrative assistant for a school board in Winnipeg.

After the mortgage payment and other bills, the couple are barely breaking even. In fact, they recently dove deeper into debt to fund Ms. Hand's tuition for graduate studies and a DIY basement bathroom renovation – all in the midst of expecting their second child.

Story continues below advertisement

"We make more than double what my parents made in the '80s, yet we're not able to save any money," says Mr. DesRoches, 35, who works for the federal government. "They raised six children off that income, but we're living paycheque to paycheque and it feels like we can barely afford to raise one child let alone two."

Although not every family with young children in Canada may be struggling to balance its monthly budget, many more are and, consequently, retirement savings falls by the wayside, says Shannon Lee Simmons, a certified financial planner at Simmons Financial Planning in Toronto.

"It's a financial juggling act all the time with many families really struggling, so when it comes to saving for retirement, a lot of people I know are saying 'What's the point? I'm going to work until I'm 80 anyways,' " she says. "That's really the norm and not one person that I'm describing here is buying Louis Vuitton bags: It's the daily grind that is becoming almost unaffordable."

A recent TD bank study offers insight into how many families with children may be putting retirement saving on hold. It found less than one quarter of millennials and less than one third of generation X believes they are saving enough for retirement.

High housing costs and lingering student debt are certainly impediments, Ms. Simmons says.

"One of the biggest problems I'm seeing is housing affordability is out of control – that's the root of the problem."

Ms. Hand and Mr. DesRoches graduated from university with a combined student debt of more than $50,000. And if it were not for them moving to Winnipeg for work, they would not have been able to afford the bungalow they purchased earlier this year.

Story continues below advertisement

"The same house in Toronto in this kind of neighbourhood would cost at least $1.5-million," Ms. Hand says.

Instead they paid in the $260,000-range for a fixer upper just 10 minutes from downtown Winnipeg.

Still the mortgage and line of credit payments along with other monthly bills take up most of their take-home pay – even though the couple's combined gross income exceeds $100,000.

On a positive note the Winnipeg couple both work in the public sector and have defined benefit pension plans.

So while they're not saving for retirement now, at least they can count on a decent pension once they do eventually retire.

Many other young families are not as lucky. Statistics Canada data from 2011 show more than 60 per cent of Canadian workers are not part of a registered pension plan of any kind.

Story continues below advertisement

Moreover, savings rates are declining, too. Only 28 per cent of workers age 25 to 34 make RRSP contributions while only 34 per cent of those between age 35 and 44 contribute. A decade ago those figures were 36 and 42 per cent respectively, according to StatsCan data.

And overall personal savings rates have fallen from 20 per cent of household income in the early '80s to less than five per cent in 2010.

Yet over the last 20 years, wages have grown even if Canadians' capacity to save has not.

In 1985, median household income was about $24,000 – or about $48,000 in today's dollars – while in 2012 median household income was about $77,000, according to StatsCan data.

Yet wage growth has not kept pace with the cost of housing. The median price of a Canadian home in 1985 was about $78,000 – or about $157,000 in today's dollars – while the median price for a home in 2015 is $433,267.

Although saving has become increasingly difficult for many young families, the sooner they start putting money aside for retirement – even $25 a week – the better off they will be long-term, says Ken Vine, senior financial planner at TD Wealth in Calgary.

Story continues below advertisement

"Over the long haul compounding returns in a tax-sheltered account like an RRSP can have an incredible effect, so the sooner you start – no matter how small – the bigger the impact."

The author of Wealthing Like Rabbits: An Original Introduction to Personal Finance, Robert Brown suggests young families struggling to save try the 'pay yourself first' strategy made popular by the bestselling book The Wealthy Barber. This involves automatically depositing small sums regularly to an RRSP or Tax-Free Savings Account (TFSA).

"Then you manage the rest of your money afterward," says Mr. Brown whose book is specifically for millennials. "Far too many young families try to pay their bills and then save, when they'll often find there's nothing left at the end of the month because it seems to all get spent one way or another."

He adds most people adjust when they have no choice, and that's what this strategy does. It's a self-imposed, forced saving plan.

"People adapt pretty easily, so if you think you can save $25 a week, aim for $40," Mr. Brown says. "I'm comfortable most people can absorb the cost."

Fact box:
Compound returns – when income from savings is continually added to the original investment to enhance returns – is a powerful tool for young families to grow their wealth. "The math doesn't lie: The simple fact is the earlier you save money, the more money you will have later in life," says personal finance author Robert Brown. Moreover, the sooner people start saving the less investment risk required to achieve their goals.

Story continues below advertisement

Take these two examples:

  1. If you put aside $1,000 and then invested $100 each month for 30 years ($36,000), at a 5 per cent annual return that investment would grow to $84,000 over that time frame.
  2. To grow the same $1,000 original investment over 10 years to about $84,000 would require monthly contributions of about $450 ($54,000) and an average return of about 9 per cent.

Source: U.S. Securities and Exchange Commission investment calculator

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies