Millennials lag in retirement savings and how to catch up

Saving for retirement is a complex journey that typically spans several decades, making it easy to understand why younger generations might feel overwhelmed. Surprisingly, a recent survey reveals that it's not Gen Z, the youngest cohort of workers, but rather millennials who express greater concern about their retirement readiness. This article delves into the findings of Manulife's 2025 report, shedding light on the financial anxieties of millennials and offering practical steps to bolster their retirement savings.

Understanding the retirement savings landscape for millennials

According to Manulife’s 2025 report titled The 40-Year Retirement – Balancing Dollars and Dreams, a significant portion of millennials—50%—believe their retirement savings are not on track. In contrast, only 34% of Gen Z feels similarly. This discrepancy highlights a critical perception gap between generations.

Fraser Wiswell, head of global retirement participant outcomes at Manulife, notes that younger individuals, like those in Gen Z, have the advantage of time. This allows them to approach their financial futures with a sense of optimism. In contrast, millennials, now at their peak earning years, are often burdened by multiple financial responsibilities, complicating their ability to save.

Millennials' financial challenges and perceptions

Many millennials express a sense of pessimism regarding their financial futures. While they ideally wish to retire by age 60, the reality is that they anticipate doing so much later, often around 66 years old. This gap between aspiration and expectation underscores a broader trend of anxiety surrounding financial security.

• High cost of living: Millennials face soaring housing costs and rising expenses, making it difficult to allocate funds for savings.
• Financial responsibilities: Many are juggling mortgages, children, and other financial obligations that strain their budgets.
• Pessimistic outlook: About 40% of millennials rate their financial health as poor or fair.

One survey respondent encapsulated this struggle, stating: “Due to the cost of pretty much everything plus rent and being the sole provider, it is hard to actually save anything.” This sentiment resonates with many, illustrating the daunting reality of saving amid competing financial priorities.

The stark reality of retirement for millennials

Millennials have valid reasons to be concerned about their retirement, as highlighted by the Manulife report. While Canadians are living longer than ever, many are also retiring sooner than expected. Interestingly, 44% of retirees from the survey reported retiring earlier than planned, primarily due to health issues.

Wiswell emphasizes that delaying retirement savings can jeopardize financial futures. The concept of compound interest signifies that the earlier one starts saving, the greater the potential for financial growth over time. This exponential growth can be a game-changer in securing a comfortable retirement.

Steps to improve retirement readiness

Despite the daunting statistics, it's crucial to recognize that it's never too late to improve one's retirement savings plan. Wiswell offers several practical strategies to help millennials get back on track:

• Start small: Initiating a savings habit, even in minor increments, is essential.
• Take advantage of employer matching: Many employers offer retirement matching programs, which can significantly boost savings without impacting take-home pay.
• Seek professional advice: Only 35% of millennials currently have a financial advisor. Engaging with a professional can provide personalized strategies to navigate complex financial landscapes.

Furthermore, Wiswell encourages millennials to balance current spending with long-term savings. Creating a healthy budget that accommodates both immediate pleasures and future needs can lead to a more secure financial future.

Creating a vision for retirement

To cultivate a proactive approach to retirement planning, Wiswell suggests that millennials envision their future selves. By observing retirees in their lives and setting personal retirement goals, they can develop a purposeful budget that aligns with their aspirations.

Ultimately, the journey to retirement savings requires a strategic mindset that blends planning with day-to-day living. As millennials tackle their financial priorities, it’s essential to keep the bigger picture in focus and take actionable steps toward achieving long-term financial security.

For more detailed insights, the full report can be accessed at Manulife's official site, offering further guidance on financial resilience and planning for retirement.