Tani Imasogie, a 28-year old living in Toronto, opened an RRSP when she was 21. Gen Z Canadians are contributing more to RRSPs than millennials did at the same age, even after adjusting for inflation.Laura Proctor/The Globe and Mail
Tani Imasogie didn’t grow up hearing about registered retirement savings plans at the dinner table. But that didn’t stop her from opening her own account by the time she was 21.
With the help of YouTube videos and online articles, she learned about the importance of compound interest and sifted through the jargon of Canada’s different registered accounts.
Today, she works at a pharmaceutical company in Toronto and contributes 3 per cent of her salary to a defined-contribution pension plan, and, in turn, her employer contributes 7 per cent. She hopes to be able to contribute more as her salary increases.
“I don’t want money to control me or make me stressed,” she said, now 28. “I want to reach financial freedom one day.”
Retire Rich: The financial struggles of Gen Z and millennials
Ms. Imasogie is one of a growing group of Gen Z Canadians, those born between 1996 and 2012, who are motivated to get a head start on retirement saving. Despite facing one of the toughest job markets in decades and an increasingly unattainable path to homeownership, many are learning from the experiences of older generations using online resources to take their financial futures into their own hands.
According to new data from TD Bank, 68 per cent of Gen Zers invest consistently each year, more than any other age group.
They’re also contributing more to their RRSPs than millennials were at the same age, according to data from Statistics Canada. In 2023, the median RRSP contribution for Canadians under 25 was $1,880, more than 20 per cent more than millennials contributed in 2009, even after adjusting for inflation.
“Gen Zs have grown up in an information-rich environment,” said Pat Giles, TD’s vice-president of Saving & Investing Journey, the bank’s approach to help Canadians start saving as early as they can. “They’re much more likely to use social media to shape their investing decisions.”
Many Gen Z Canadians have taught themselves financial basics, with the help of resources in the form of TikToks, YouTube, Reddit or even AI. A June CFA Institute report found that 79 per cent of young Canadians trust online financial education, more than two-thirds use AI tools like ChatGPT for information and 62 per cent turn to influencers and social media.
Ms. Imasogie estimates that a large majority of what she knows about money came from the internet. She then used that knowledge to open her RRSP through Questrade, a do-it-yourself investment platform.
Low-cost investment platforms such as Questrade and Wealthsimple let users open and manage registered accounts from their phones, with minimal fees and no in-person meetings. Today, nearly one in five Canadians aged 18 to 40 use Wealthsimple, according to the company.
Ms. Imasogie says much of her financial knowledge came from the internet.Laura Proctor/The Globe and Mail
While a tough labour market stalled salary growth for some young workers, the pandemic presented a unique opportunity to them. Many young people moved back into their parents’ home, had government benefits rolling in and had no places to spend money, said Matthew Kempton, a portfolio manager at Verecan Capital Management.
“Younger people, especially, gained a lot of interest in investing through that time, as it was something to pass the time,” Mr. Kempton said.
Some were able to start investing earlier than they’d planned. In 2019, the median RRSP contribution for Canadians under 25 was $1,430. A year later, it jumped to $1,720.
Giancarlo Rosa, 25, was one of them. He opened a TFSA at 18 and an RRSP at 20, but it wasn’t until the COVID lockdowns, when his expenses dropped, that his investing habits really took off.
“Time value of money was a huge thing,” said Mr. Rosa, who lives in Richmond Hill, Ont. “It just made sense to get started early rather than playing catch-up later.”
He now saves 25 per cent of his nearly six-figure income and contributes regularly to his RRSP, not just for retirement, but to eventually use the funds under the federal Home Buyers’ Plan, which lets first-time home buyers borrow from their RRSP tax-free for a down payment.
“The sole reason for putting it in the RRSP is not for retirement, as dumb as I sound,” he said. “It’s to take advantage of the Home Buyers’ Plan.”
That kind of strategy is becoming more common, financial experts say. New policies have made registered accounts more flexible, and appealing, for young people. The FHSA, introduced in 2023, allows Canadians to save up to $40,000 tax-free toward a home. In April, 2024, the Home Buyers’ Plan withdrawal limit rose to $60,000 from $35,000.
Still, some Gen Zers are able to save simply because they’re not buying homes.
For many, the decision to hold off on homeownership isn’t a rejection of the dream, but a lesson learned, said Hans Friedrich, an adviser at Sun Life and managing partner at Evolv Financial. After watching older millennials stretch their budgets thin to buy property, many Gen Zers are choosing to invest their savings instead.
“A lot of people on the millennial side tried to push through that and were like, ‘We’re going to get this done no matter what,’” Mr. Friedrich said. “Gen Z is the first generation to actually learn from what the millennials did.”