Young Canadians Expect To Financially Support Aging Parents: 10th Annual Royal Bank Financial Group RRSP Survey

TORONTO, February 21, 2001 - One in four young Canadians believe they will be required to provide financial support to their parents in the future, in addition to saving for their own retirement, according to the 10th Annual Royal Bank Financial Group RRSP Poll.

"Our poll suggests that the next generation feels that beyond preparing financially for such major life events as buying a home, starting a family and retirement, they may also be required to support aging parents," said Dale Mitchell, Royal Bank's manager of registered products. "The younger the respondent, the more likely he or she feels this sense of responsibility, whether that means paying for homecare, healthcare costs or other parental needs."

The annual survey found that 27 per cent of Canadians aged 18-29 view parental support as a long-term financial factor, versus 24 per cent for Canadians in their early 30s. Overall, the poll found that one in five Canadians (21 per cent) of all age groups views parental support as a future financial responsibility. This belief was most prevalent in Ontario (28 per cent), with about as many women (20 per cent) as men (22 per cent) holding this view.

"Younger generations have advantages their older counterparts did not, including direct access to a range of investment tools and information resources about retirement planning," said Mitchell. "They should talk to their parents about financial planning. The lesson to be learned is to start saving early, make regular monthly contributions to your RRSP, and work out a plan with a financial advisor to put you on the right path."

Currently, nearly 60 per cent of respondents between18-34 are using the services of a financial advisor to achieve their financial objectives. Half (51 per cent) of RRSP contributors started contributing between the ages of 18-29 years of age.

"We asked Canadians what they expect to be their primary source of retirement income and the answer we heard was different than what you might have expected a generation ago," said Mitchell. "While a home is a good investment, few expect to sell the family home and rely solely on the equity they have built up to finance their retirement. Instead, they are relying on basic investment practices to provide for better financial security down the road."

The majority or 65 per cent of respondents expect to live off the income from their investments or from an employee pension. The breakdown of this figure showed 35 per cent identified investment income, while 30 per cent expect an employee pension to provide for their retirement. While 73 per cent of respondents with parent(s) still living expect to inherit their parent's estate, only 7 per cent described this inheritance as very important to their financial planning.

A greater number of younger Canadians (79 per cent) aged 18-34 expect to inherit all or part of their parents' estate.

The poll also identified that one-third (33 per cent) of respondents agreed with the statement that they are "just keeping their heads above water," with the highest concentration among those aged 55 and older (41 per cent).

"We shouldn't forget that others within this age group are relatively well off and prepared for retirement. The clear message for the younger generation - especially those who are seeing their parents struggle - is to take a long-term view and start saving now for retirement," Mitchell said.

"Above all, with the March 1 RRSP deadline just around the corner, now is the time to make your RRSP contribution," said Mitchell. "However, once the deadline has passed, a financial advisor can still provide advice on this year's contribution and develop a long-term financial plan."

The Royal Bank Financial Group survey was conducted by Ipsos-Reid November 9-19, 2000. Telephone interviews were conducted with 1,202 Canadians 18 years of age or over. The survey is considered accurate within 2.8 percentage points, 19 times out of 20. Data were weighted to reflect the regional age and gender composition of Canada according to 1996 census figures.

Royal Bank of Canada (RY) is a diversified financial services company. It provides personal and commercial banking, wealth management services, insurance, corporate investment banking, and transaction processing on a global basis. The company employs more than 54,000 people who serve 10 million personal, business and public sector customers in North America and in some 30 countries around the world. For more information, please visit www.royalbank.com.

For more information pertaining to this release please contact:

Jeff Keay
Media Relations
416-974-5506
OR
Nancy J. White
RBC Investments
416-955-2735

Note to editors: More details, statistics and downloadable graphics from the 10th Annual RRSP Survey are available at Royal Bank