(Toronto) Jason Francone, 24, has always been pretty good with his money.
Posted yesterday at 3:29 p.m.
“Coupons are my middle name; discounts are in my DNA,” he says.
But he doesn’t just excel in the art of bargain hunting. Mr. Francone also saves in other ways and has worked to build wealth since he was a teenager.
But soaring inflation, a boiling housing market, interest rate hikes and a struggling stock market, combined with him jumping from one landscaping contract to the next years, have left Mr. Francone nervous about his long-term financial goals, such as retirement.
PHOTO SCOTT, THE CANADIAN PRESS
Jason Francone
Inflation and other economic pressures have certainly been a very big burden and distraction to my savings.
Jason Francone
Mr. Francone believes his ability to save for retirement will be a major concern until he finds more stable employment. In the meantime, he stopped making monthly deposits into his savings and investment accounts to ease some of his financial worries.
Although change may seem years away, saving for retirement is a top priority for 26% of Canadians aged 18 to 34, according to a recent survey by the Ontario Healthcare of Ontario Pension Plan (HOOPP). . However, 79% of respondents in this age group say saving for retirement is too expensive, 35% say they haven’t saved anything for retirement yet, and 37% say they haven’t saved anything in the past year. .
Personal finance experts say the current economic climate will likely result in financial hardship for many young adults, no matter how carefully they’ve managed their money, but the environment won’t necessarily derail their path to retirement. .
“I think it’s definitely going to slow them down, but it all depends on how long this economic cycle lasts,” observes financial planner Jackie Porter.
She discusses the impact of the 2008 recession on older millennials, in the 35 to 42 age bracket, and how some of them have only recently managed to recover financially. The 2008 recession lasted about seven months in Canada and 18 months south of the border.
“Young Canadians will have to save between 8 and 12 times their income if they want to retire at 65,” calculates Ms.me Carry.
Access to workplace pension and benefits programs is key to helping young adults get on the right path to a comfortable retirement, she adds. According to Statistics Canada, 35.7% of primary breadwinners under the age of 35 have access to a registered pension plan sponsored by their employer.
Mr. Francone has not had access to these programs because he has only been offered short-term landscaping contracts and says that it is very difficult to access the list of full-time employees , where he could participate in savings programs.
“Although I made a lot of money, I was never really introduced to putting money aside for retirement or a pension, or even the possibility of having benefits,” explains he.
A property as a retirement plan
Home ownership is another part of the retirement equation, as it has often been a vehicle used to finance it. The HOOPP survey found that saving for the purchase of a home or property was high on a priority list for 48% of respondents aged 18-34.
For Mr Francone, who currently lives at home with his parents due to high rent costs, owning a property is “extremely important”.
“Even if this objective and the idea [d’acheter une propriété] might be further away than expected at that age, it still hasn’t changed his level of importance, he assures. It’s important that I live in a place that belongs to me, so that I can have full control of my future. »
Personal finance influencer Ellyce Fulmore takes a slightly different view of homeownership and doesn’t think young adults should rush into the market.
She argues that buying a home isn’t always the big investment everyone imagines, because of all the expected and unexpected costs involved. There is also a risk of having to resell at a loss.
“A house should not be a retirement plan,” she believes.
Mme Fulmore has received many questions from his audience, largely Gen Zers and younger millennials, about saving and investing for retirement.
“I think most people in my age group feel the pressure to start investing for their retirement, putting money aside, but also not knowing where to start,” she explains. With finances being tighter right now, it’s an added burden of stress. In addition, one wonders what is the right thing to do. »
To help navigate the current economic climate and keep retirement ambitions on track – especially as the possibility of a recession increases – Ms.me Fulmore urges young adults to prioritize an emergency fund and top it off as much as possible. She suggests storing between 9 and 12 months of expenses there, in a high-interest savings account.
She also thinks young adults should stick with their existing financial plan, despite everything they hear.
“What’s important is to keep doing what you can, rather than following a first instinct that would advise you to stop everything completely,” says Ms.me Fulmore.