Gen Z invests earlier in RRSPs than previous generations: IG Wealth Management

According to figures from IG Wealth Management, Generation Z is putting money into a registered retirement savings plan (RRSP) earlier than any previous generation.

Figures show that 18 percent of Gen Z — who are typically 18 to 25 years old — began having an RRSP in their late teens, around age 15 to 19.

Meanwhile, the data shows that 21 percent started between the ages of 20 and 24.

This is higher than any other generation in the same age groups, with 13 percent and 17 percent for Millennials, seven and 14 percent for Gen X, and nine and 11 percent for Baby Boomers.

Christine Van Cauwenberghe, head of financial planning at IG Wealth Management, said she was not surprised by the data.

“I think Gen Z people have a lot of competing needs. There are many things they need to make sure they get done,” said Van Cauwenberghe.

“They don’t expect the government or a long-term employer to take care of them for the long term, in the way a baby boomer might expect to retire on a defined benefit plan.”

She said each generation’s willingness to start saving depends on the environment they were born into.

“I think a lot of Boomers grew up in an environment where the next generation was always better than the last. So I think there is a lot of optimism there.”

She adds that finding the right way to save is unique to each individual and depends on what their retirement expectations are.

“I think you really have to look at your personal situation and say, ‘What’s important to me?’”

Van Cauwenberghe said future generations could learn from Gen Z and realize the importance of starting an RRSP as soon as possible.

HOW DO YOU START SAVING FOR RETIREMENT?

While a number of people have started saving for retirement, there are still those who have yet to do so.

According to the data, 59 percent of Gen Z respondents did not have an RRSP, while 31 percent of Millennials were in the same boat. A smaller portion of Gen Xers, 22 percent, had not yet set up a retirement plan, and 16 percent of baby boomers said they had no RRSPs either.

Van Cauwenberghe said it’s never too late to start saving and people need to take one small step at a time.

“The best time is to start today and the second best time is to start tomorrow and just take small steps. Don’t think that you have a huge sum to save.”

She recommends consulting a financial advisor to create a plan that works best for you.

“I think there’s a lot of people who go to a financial planner and go through the numbers, and they kind of work backwards, and they see how much they have to save monthly and break it down into a smaller, digestible chunk — you really realize.” that it’s not as big a deal as they thought.

If individuals still wish to contribute to an RRSP for the 2022 tax season, contributions can be made before March 1 and they can claim them on their 2022 tax return as long as they are less than their maximum contribution.

Source: winnipeg.ctvnews.ca