Do young people really need an RRSP?

I was particularly irked by a recent press release titled “The Young and the RRSP-less” that reported on the results of an RBC Poll. It seems the number of Canadians aged 18 to 34 who have RRSPs has dropped to the lowest level in almost a decade. and overall, retirement savings ranked seventh as a priority for this group behind debt reduction, saving for a rainy day and homeownership.

That made perfect sense to me. But I figured I’d better check with an expert, so I asked actuary Malcolm Hamilton to weigh in on the subject. And it turns out that on this issue we are both on the same page.

“If a 25 year old Canadian is looking forward to getting married, having children and buying a house, they should concentrate on paying down debt, saving a down payment and then paying down their mortgage as fast as possible,” says Hamilton. “If that means they don’t have enough money to save for retirement until into their late 30s and 40s, that’s fine.”

What would really concern him are people who have done none of these things and are squandering their income on every conceivable extravagance.

Besides, another recent survey confirms that those who have not yet started seriously saving for retirement will get there eventually. According to research from the Investors Group, Gen X - the segment of the population between the ages of 30 and 44 – is becoming financially savvy. Sixty-two per cent of Gen Xers have RRSPs and most plan to contribute the same or more in 2010 as in the previous year.

So age 19 may not be too young to start an RRSP, but don’t despair if life gets in the way and you don’t get started until age 30 or 40 or even later. There is still time to develop a retirement savings plan that will ensure that only the family felines feast on cat chow.