You probably remember the day your parent(s) retired, or maybe they’re planning it now — after thirty or forty years on the job, they’ll throw a party, collect a healthy pension and book a one-way flight to Mazatlán to ride out the rest of their days on a beach.
This might be a sweeping statement, but you get the point: a baby boomer's retirement is relatively straightforward. And thanks to a handful of factors including a changing job landscape and higher life expectancy, as a millennial, chances are your retirement is going to look quite different from your parents.
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So how exactly will your millennial retirement differ from that of your baby boomer parents? Let’s look at a few factors that might differ.
The Age You Retire
Although there’s no official retirement age in Canada, the standard age to start collecting the Canada Pension Plan (CPP) retirement pension is 65. Some people choose to retire earlier, allowing them to receive a smaller monthly amount. Others decided to wait, amounting in a larger monthly payment (which maxes out by age 70).
According to the Statistics Canada Canadian Labour Force Survey (LFS), the average age of retirement in 2017 was 64 years, almost three years later than the average age in the late 1990s. This could be due to a number of factors including longer life expectancy, higher job satisfaction and less physically demanding jobs. If the trend continues, millennials can expect a later retirement than the current average age.
Your Career Path
Forty or fifty years ago, it was much more common to enter a university stream, graduate, and begin work the very next day (think teacher, nurse or accountant). Typically, this straight-out-of-university job would turn into a lifelong career—a recent Statistics Canada study found that about two-thirds of baby boomers entered their fifties in a long-term job (defined as a job that had lasted 12 years or more with the same employer).
In today’s gig economy, the average career path involves far more twists, turns and even the occasional dead end. Millennials are embarking on their careers later in life and switching jobs and companies often (the average Gen Y-er holds 3.9 jobs over his/her first 12 years on the job market, spending 2.7 years in each job on average, according to a Workopolis report). Add a worldwide pandemic and record unemployment rates into the mix, and you’ve certainly got yourself an unconventional career path. Depending on your type of pension plan, these shorter work stints might affect your pension fund, impacting you financially and forcing you to continue working into an older age.
As the idea of a nuclear family changes, so might the average retirement experience.
Whereas parents once financially supported a handful of children well into young adulthood, many now are not having children at all. Smaller families mean no large house from which to downgrade when the nest is finally empty, and no retirement bucket list to embark on (chances are, as a childless millennial with travel more accessible than ever, you’ve already checked them all off).
The delayed early life transitions of millennials might show up later in life, impacting retirement. For example, buying a house alone in your thirties (when your already-married parents bought theirs in their 20s) means it might not be paid off until much later, pushing the age you’re able to retire back even further.
It’s difficult to imagine how exactly a millennial retirement will someday look, but based on the above factors and your own unique circumstances, it certainly won’t look as cookie-cutter as the retirements of generations past. Remember, the best thing you can do for yourself is to properly set yourself up for retirement with a long-term financial plan, active savings account, and a full knowledge of opportunities.