Retirement for millennials: Housing costs threaten retirement savingsBy The IJ Staff | December 12 2019 01:50PM
The financial future for millennials is vastly different from that of previous generations, and many fear their retirement plans will suffer if they make the wrong choice about home ownership today.
Barely half of all millennials surveyed by KPMG LLP think they will ever be able to afford a house, which could have a dramatic impact on their ability to retire, finds a new poll commissioned by KPMG in Canada.
The survey of 2,500 Canadians including 1,000 millennials between 23 and 38, found that only 54 per cent of millennials say they will ever be able to afford a home, a big drop in home ownership levels compared to previous generations. According to data from Statistics Canada, 70.1 per cent of Canadians between 35 and 54 and 76.3 per cent of those between 55 and 64 owned a home in 2016.
“Millennials face a choice today that their parents’ generation didn’t,” says KPMG’s Martin Joyce, national leader of human and social services. “They can 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, which limits millennials’ ability to save. While most feel home ownership is an investment, many millennials worry their homes will be worth less in the future.”
Of those surveyed, 64 per cent worry if they buy a home and delay their savings, they won’t have saved enough for retirement; 42 per cent are putting their retirement savings on hold to pay off or pay down their mortgage. Almost two in five or 38 per cent of millennials who do own their homes believe they’ve paid so much for their house, they’re afraid they won’t get the same price for it when their time comes to retire.
“They face unique challenges when it comes to building wealth, despite having more education and income,” relative to older generations, Joyce adds. This is “primarily because of housing unaffordability.”