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Youth employment and the retirement hustle

March 10th, 2015 by

Stop thinking there's such a thing as being too young to start planning for retirement. If you're out of the womb, you're already too old...


In an earlier article, we looked at a case study by the Financial Post that compared the long-term financial gain of going to university against that of jumping straight into the workforce.

On paper, all evidence pointed to a university degree being the more profitable investment. We learned those earliest first steps following high school really do count for something - literally. Toronto-based financial planner Jason Heath pegged his estimate of what a high school graduate who jumped straight into the workforce would have in a retirement account after 45 years at $1.4 million. Next, based on data from the Council of Ontario Universities, Heath pegged his estimate of what a university graduate would have after 40 years at $3.8 million - more than 2.5 times that of the worker with no degree.

Of course, it could be argued that neither estimate paints a picture that accurately depicts the reality of the situation for young adults in Canada. 


Last year, the CBC published an article noting that the average student debt load in Canada had climbed to $27,000 per student. For many of the 400,000 Canadians who took on student debt between 2012 and 2013, that meant delaying significant life milestones such as getting married, buying a home, (or, at least, buying their first pair of pixie pants) and treating mom to the spa all on their own for the first time ever - all the important landmarks in life. And it’s not as though the job market is exactly teeming with opportunities with which to pay off that student debt once these grads get to knocking on doors.

But the grass isn't necessarily greener (nor is the money in their wallets) for those who steer away from taking on student debt, either. 

The plight of the young

Youth unemployment in Canada continues be a major economic concern. Over the past three decades, youth unemployment rates have shown to take longer to recover from an economic recession. In the early 1980s, Canada saw inflation reach 12 percent, interest rates jump to more than 20 percent - and youth unemployment skyrocket to 21 percent. We'd see a recovery of nearly 10 points in youth unemployment before the decade was up. In the early '90s, we saw a similar spike play out - though it took almost 15 years for youth unemployment to recover. We felt another spike following the financial crisis of 2008, at which time it jumped to just more than 16 percent. It's slid just 3 points in the years since.

Now, youth unemployment hovers at around 13 percent. Student debt in excess of $30,000 affects more than a third of all those who have any student debt at all. Developing a plan to start investing for retirement in these critical first few years after high school might be just one more significant life event many new graduates are finding themselves wanting to delay for just a little longer.

Yikes - bad idea. Some might have their sights set on the post-secondary hustle, which may prove to pay off more in the long run; others might choose to take their gusto direct-to-market. But all have the potential to reach millionaire-status by retirement if they start planning and saving for it right. flippin'. now. 

One step at a time

Each road comes with its own set of obstacles - and each is admirably ambitious. But there’s only one road to a richer retirement; it's one we should all be consistently navigating towards every step of the way - even in our earliest ones (pssst - it’s saving).

Jun 26 2017 12:25am

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