Your Money: Retirement ready for Gen Xers
By Neil Mardian on April 20, 2019.
neil.mardian@td.com (Part 2 of 3) When you’ve just started your first job, and the money starts rolling in, it might seem daunting to think about putting money aside – for your big life goals or for a rainy day. It all seems so very far away. As we grow older, the questions grow too: Am I saving enough? Of course, the day you need that money doesn’t have to be rainy. With a little planning, it can be downright sunny (with a beach, some palm trees and even a fruity drink in hand). Yes, we’re talking about retirement, perhaps the mother of all financial goals, a day many of us spend most of our careers working toward. A recent Wealth Behavioural Finance Report, found that age and personality can often be a strong indicator of investing and financial planning behaviour – and how Canadians in general perceive their retirement readiness. More than 1,600 Canadians were surveyed, about their financial habits, personality and behaviour. The results suggested that few of us feel sure we will be financially ready for retirement when the time comes. Younger investors, in particular, know they need to save significantly for their golden years, but among emerging affluent investors aged 24 to 38 years, just 20 per cent say they feel confident they will be ready financially when the retirement comes, versus 39 per cent of those 55 and up. With age comes some confidence – and perhaps some savings – but also new expenses, experiences and challenges. Among those surveyed, only one in five parents (22 per cent) report feeling satisfied with their retirement readiness, compared with 38 per cent for couples without children. How you view your retirement readiness may depend on your age and personality. We’ve developed a checklist of retirement-ready habits that may help you prepare for the big day – whatever age or life stage you’re at. The truth is, many of us may be doing a lot of the right things. But whether we’re young and just getting started, growing older and getting squeezed, or getting serious with the homestretch in sight, it’s understandable that many of us might wonder if we’re on the right track. With that in mind, we’ve put together a series of checklists to share some top behavioural habits that can help create confidence towards retirement readiness. Already got them covered? Great. If not, there might be some value in speaking with a financial professional. They may be able to help steer you onto the right track. In this article then let’s focus on “Retirement Ready” when you’re getting really crunched (39 to 54 years of age), the Gen X’s. Tell me if this sounds familiar: For once you feel like you’re earning a healthy income, but you are never sure where it all goes! According to the Wealth Behavioural Finance Report, parents in particular reported a major drop in financial satisfaction at this age, as mortgage payments, hockey equipment, post-secondary tuition and the needs of elderly parents can take over. Among all parents surveyed, only 22 per cent reported “very high” satisfaction with their retirement readiness, compared to 38 per cent for couples with no children and approximately 34 per cent for singles. With so much going on, it’s little wonder your savings plan might get pushed to the backburner. But all is not lost: You may already have assets such as a house, some RSP or TFSA savings, and maybe even an employer pension that you may be counting on to play a part in keeping you financially afloat during your retirement years. Here are some other behaviours that successful savers can consider to help stay on track during these years: (1) Work with an advisor. If you haven’t met with a financial professional or have a goal-based financial plan, now may still be a good time to get one. They can help you to develop a reasonable roadmap to help prioritize and target your goals. (2) Put a picture to your goals. Several behavioural studies have shown that we are better at saving for goals when we attach visible reminders. Want to spend your retirement travelling? You may want to try pinning pictures to the fridge. (3) Review and revise. Some people like lots of contact with their advisor, others may like a little less. You can establish a schedule to check in with your wealth plan and make adjustments as your life changes. (4) Pay yourself first. Finding money left over after bills are paid can be a challenge. Even small automatic contributions to your retirement savings can help maintain momentum and add up in the long run. (5) Ask yourself. Do I really need that? Consumer debt is expensive, but spending less than you earn can be difficult for some. If it’s reasonable, making a commitment to live within your means can be an important step towards saving. (6). Keep talking. Have ongoing discussions with your significant other about your retirement, so your dreams and goals can be shared. For a further discussion around your investment and estate planning issues, contact Neil Mardian, M.Sc. (Mgmt) CFP at 403-504-3026 or neil.mardian@td.com 10-9
