The millenial dilemma

The millenial dilemma

< Back to Articles | Topics: Working for you | Contributors: Nick Cunningham, Policy Analyst, Halifax Chamber of Commerce | Published: February 1, 2024

Historically, owning your own home was an important life goal for most people. It represents security and stability and is an investment in your future. However, in recent years, homeownership has been falling in Canada while the number of renters has been on the rise.

On December 13th, the Halifax Chamber hosted the Provincial Minister of Housing, John Lohr, along with over 300 attendees at the Halifax Marriot Harbourfront Hotel, to discuss the on-going housing crisis in Nova Scotia as well as the Province’s new 5-year housing strategy, Action for Housing. Following the discussion, I couldn’t help but wonder what the implications might be on future generations’ retirement plans if they are unable to build enough equity through home ownership. Will social assistances in Canada for seniors like Old Age Security (OAS) be enough for millennials by the time they retire?

The majority of us spend our working years saving for retirement and strategizing about how to make the most of our investments to enjoy our lifestyle into old age. More and more, Canadians are planning to rely on their home as a big part of their retirement plans.

A new RBC survey says home equity is playing a bigger role in Canadian’s retirement plans. More than half (55%) of non-retired Canadians age 50+ said they expect to leverage the equity in their home as a source of retirement income (up from 49% in 2018).1

The survey also found that 25% of these non-retired Canadians would borrow against the equity in their home if needed, and 12% believe they would rent out a part of their home for additional funds.1

For millennial workers who rent their entire careers, they need to save 50% more than homeowners in order to have enough monthly income in retirement, according to the 2023 Mercer Retirement Readiness Barometer.2

Edward Jones Canada released a study that found millennials (ages 26-41) are more likely than other generations to be off-track when it comes to saving for retirement. The study also found that 70% of respondents in this age group are not saving enough for their retirement, with 27% unable to afford to do so at all. 3

This isn’t because millennials are inherently stupid when it comes to personal finances. They are in fact the most educated generation in history. However, the cost of this education is one of the issues. For the millennials who paid excessive tuition rates to obtain that education, they now have debt-to-income ratios of 216%, compared to 125% for Gen-Xers, and 80% for Baby Boomers. Coupled with a period of high inflation and relatively small wage increases, saving for a down payment now takes an average of 13 years compared to just 5 years in 1976, according to figures from Statistics Canada.4

For businesses who are looking to attract and retain talent, employers should really consider a matching workplace retirement savings plan if possible. These group plans can help employees feel valued and build financial security for themselves and their families through tax-advantaged savings. A survey by Maru Group Ltd. on behalf of the Healthcare of Ontario Pension Plan found that 88% of those that offer a benefit pension plan said it was “extremely important” or “very important” to their employee retention efforts.5

Therefore, while our government officials toil with short term strategies and solutions to address the immediate need for more housing units across the country, businesses that understand the plight of their younger workforce will be able better retain the talent they need for long-term success.

1. Renaud, M. (2019, October 28). Using your home equity for retirement income. Toronto Realty Boutique. https://torontorealtyboutique....

2. Millennials priced out of ownership must save 50% more than homeowners to retire. (n.d.). https://www.mercer.com/en-ca/a...

3. Edward Jones Study: Millennial retirement. Edward Jones. (n.d.). https://www.edwardjones.ca/ca-....

4. Randall, S. (2019, December 5). KPMG: Many Canadian millennials will never own A home. Wealth Professional. https://www.wealthprofessional...

5. Bailey, L. (2021, November 17). Employers see retirement benefits as top attraction, Retention Tool: Survey. Benefits Canada.com. https://www.benefitscanada.com...

< Back to Articles | Topics: Working for you

Stay Connected

Subscribe to our weekly e-newsletter and receive important updates on Halifax Chamber events, Member benefits and advocacy news.

Hear from Premier Tim Houston