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Millennials, we should talk about your retirement.

Seriously. We are not rushing things here.

The oldest of you are now 42, which is an ideal vantage point for assessing what you’ve accomplished so far and what you need to do to retire comfortably in 20 or 30 years. A recent survey suggests this process is going okay or better for many of you, despite adversity in the form of high housing costs.

There’s just one complication in the results of the survey, which was completed by 1,294 readers of the Carrick on Money newsletter who were born between 1981 and 1996. A majority said they expect to retire before age 65, which is understandable but also unrealistic. Retiring between 65 and 70 will fit you better.

Millennials had an unusually eventful entry into financial adulthood, what with many of you graduating in the challenging times after the 2008-09 global financial crisis. This was the era of the gig economy, with young workers often offered contracts rather than full-time, career-building work.

As you found your footing in the job market and looked at buying homes, prices surged way ahead of income growth. Those of you who got into the housing market have had to contend with inflation and the highest interest rates in decades. Your optimism about retirement in light of all these developments is impressive.

Stress Test podcast: Retirement might look different for Gen Z and millennials. Here's how

In the survey, 55 per cent of participants said they were confident of a comfortable retirement, and another 17 per cent said they believed things would work out. If you feel out of step with these keeners, you’ve got company. Almost 20 per cent said they had concerns, and 8 per cent said they were worried they would never save enough to retire.

Almost 96 per cent of survey participants have started a tax-free savings account or registered retirement savings plan, but we all know there’s a difference between having a retirement savings account and contributing to one. If you’re a millennial who can’t find the money to save for retirement, you’ll relate to the 31 per cent of survey participants who said saving is crowded out by living expenses.

You won’t be shocked to hear that housing costs are the big problem – both rents and mortgages. Almost half of participants cited these costs as their top retirement savings challenge.

In the job market, the story of millennials took a turn for the better in 2021-22 as labour market disruption during the pandemic created a shortage of workers. You can see this shift in the fact that eight in 10 survey participants said their career path makes them confident they will have money to save for retirement later in life.

Is a $100,000 salary enough for a comfortable life any more?

Some refreshingly realistic thinking by millennials about retirement: almost 85 per cent of survey respondents thought their house would not be the foundation of their retirement. Your parents can validate how hard it is to convert the equity in a house into retirement income. You need separate retirement savings to do that.

Where millennials like you need to refine your retirement thinking is in your target age for leaving the work force. Aiming for between 65 to 70 would be a massive stress reliever.

Your big challenge in retiring before 65 is making your savings last for something like 30 or more years. If you leave the work force in your early 60s, you could be retired almost as long as you worked. The savings required will be tremendously demanding on a year-by-year basis, especially with a big mortgage and children.

If you push retirement past 65, it’s less of a big deal to wait until your 40s to get serious about retirement saving. It’s ideal to start retirement saving early in life because you have decades for your money to compound. But, as the survey results show, lots of millennials are too bogged down with housing costs to make much headway on retirement.

If you’re in that group, relax. You can start later to save for retirement and be fine if you stay flexible on your retirement age. In the meantime, work on your career. Earning more is personal finance’s biggest problem solver.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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