VANCOUVER (NEWS 1130) — With homeownership pretty much a pipedream — especially in high-priced areas like Vancouver — many millennials are worried that could have a dramatic impact on their ability to retire.
A KPMG Millennials and Retirement poll has found 54 per cent of Canadians between the ages of 23 and 38 believe they will never be able to afford a home, which could have a major impact on their golden years.
“The financial future for millennials is vastly different from that of previous generations,” says KPMG’s Martin Joyce, Partner, National Leader, Human & Social Services. “They face unique challenges when it comes to building wealth despite having more education and income, primarily because of housing unaffordability.”
About two-thirds of millennials worry if they buy a home and delay their savings, they won’t have enough saved for retirement.
“What we are seeing is that millennials face a choice today that their parents’ generation didn’t,” Joyce says. “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 homeownership is an investment for financial stability, they worry their home will be worth less in the future.”
Even though millennials make more money, due to being the most educated generation, those who have bought homes are more indebted than the generations before them. Data from Statistics Canada shows millennials have a debt-to-income ratio of 216 per cent — much higher than Gen-Xers and baby boomers had at their age.
In turn, high rents, especially in major urban centres like Vancouver, are also squeezing the younger generation’s ability to save.
About 90 per cent of millennials think people will have to continue working longer with 84 per cent seeing the retirement age higher than 65.
The poll surveyed 2,500 Canadians, with 1,000 of them being millennials.
It also found many Canadians the government should be playing a bigger role to help Canadians meet their retirement needs.