Gen X and Y upbeat about financial goals: BMO
TORONTO - Take off the rose-coloured glasses, Generation X and Generation Y.
That's the message from the Bank of Montreal Wealth Institute, which says young adults and teens may be overly confident about facing life's major financial milestones.
According to a 13-page report issued Friday, the bank says 68 per cent of those recently surveyed in these age groups believe they'll be able to buy a house at some point.
It says that's optimistic, given the average home now costs almost eight times the average pre-tax, full-time yearly salary. In 1997, the average Canadian home only cost five times the average salary.
When it comes to kids, 70 per cent of the survey's respondents who want to start a family said they'll be able to pay for post-secondary education — which BMO says could be as high as $140,000 for a child born in 2013.
There was a similar optimism about their older years, with 65 per cent saying they expect to retire "comfortably" when they choose to do so. A majority also planned on stopping work at around age 61 — two years earlier than the average Baby Boomer.
Generation X ages current range from mid-30s to late 40s while Generation Y refer to people currently in their late teens to early 30s. The study's findings were based on an online survey done between Nov. 6 to Nov. 11, 2013 with 842 Canadians in these age groups.
The polling industry's professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.
However, the BMO study concludes that Generations X and Y face a bigger financial challenge than the older Baby Boom generation born from the mid-1940s to mid-1960s.
"The combination of less savings for retirement, less access to company pensions, a planned earlier retirement age, ongoing education savings, and increased costs for basics such as food and housing leave Generation X and Generation Y with a much lower probability of achieving their retirement goals than the Baby Boomer generation before them," the BMO report cautions.
"The end result is that it is very likely that Generation X and Generation Y will have to save more efficiently and work more years than the Baby Boomers did."