New poll findings show having to work longer number one retirement concern amongst Canadians 25-34
TORONTO, December 13, 2010 /Canada NewsWire/ - Canadians aged 25 to 34 fear that they will have to work longer into their golden years, according to a new poll commissioned by Edward Jones. This is a concern that has increased over the past four years - in 2006, 28 per cent of Canadians aged 25 to 34 listed this as their top fear about retirement, while today 40 per cent say this is their top fear.
A similar trend can be seen in the U.S. In 2006, only 15 per cent of Americans aged 25 to 34 listed having to work longer as their number one retirement fear, while now nearly one-fourth (23%) list this as their top fear.
"The recession has been a wake-up call for many investors - especially those that are still early in their careers," says Sucharita Maitra, principal, Retirement Planning, Edward Jones. "Many fear that they will have to work longer to supplement their savings making retiring at 65 a pipe dream, a worry that has become even more pronounced since the recession. I can't stress enough the importance of starting to save early to avoid having to work longer."
Maitra points out some key reasons for why Canadians should start saving early:
More time to take advantage of compound interest. Compound interest grows investments more quickly because interest is calculated on the original investment amount plus the interest that has already accrued on initial investment. For example, an investor who starts investing $1,000 a year at a 5 per cent interest rate starting at age 24 will retire at age 65 with $141,623. The original investment was only $41,000 but compound interest added $100,623. On the other hand, if that same investor waited 10 years until age 34 to start investing, they would only save $78,836 by age 65. That is $62,787 less than if they had started 10 years earlier.
Registered accounts let you keep more of your hard-earned dollars. Saving vehicles such as Registered Retirement Savings Plans (RRSPs) provide a tax break, which can really add up over the years. The money saved on taxes can also be invested back into retirement savings, allowing money to grow faster.
Small sacrifices now may mean big enjoyment later. Saving a small amount now and continuing to save will build a retirement fund for the long-term. Even putting away an extra $50 a month by forgoing a dinner out once a month can really add up, thanks to compound interest.
"Quelling fears about retirement comes back to planning and preparation," says Maitra. "Developing a financial strategy early and sticking to it will assist in calming those worries and allow young Canadians to finish the rat race in record time."