Your Money: Retirement ready for Baby Boomers

By Neil Mardian on May 18, 2019.

neil.mardian@td.com

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% say they feel confident they will be ready financially when the retirement comes, versus 39% 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%) report feeling satisfied with their retirement readiness, compared with 38% 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.

For this column we will focus on being “Retirement Ready” for the massive population of the “Baby Boomer” generation (55 and up years of age). With retirement on the horizon (along with the thought of enjoying all the epic sunsets you can handle), it’s normal to have questions about your next move. At this point you may wonder if you’re saving enough or even if you have enough to retire early. If you’ve been working with an advisor, they may be able to give you an idea of what your retirement could look like and what it may take to get there. According to the Wealth Behavioural Finance Report, older investors like you are more likely to report feeling confident in their financial advisors, more satisfied with their retirement readiness and are generally more relaxed than younger investors. In fact, 41% of investors 55 and up surveyed report that their wealth manager is “worth every dollar.” That said, it’s not uncommon for life to throw a curveball at this stage, such as an illness or death in the family. It may be helpful to have a plan in place that helps protect what you’ve grown over the years.

Again, here are six things individuals in this age group can consider doing to see if they are retirement ready:

1. Review your asset mix. At this stage, investors may wish to meet more regularly with an advisor to help review your asset mix and determine whether it’s time for your investments to skew more conservative.

2. Plan a tax strategy. As you get closer to a day when you’ll start drawing down your savings, you may wish to start thinking about the most tax-efficient way to access your savings, and which assets you will draw on first.

3. Where there’s a will… If something were to happen to you today, would your wishes be clear? This may be an opportune time to review any estate plan, ensuring you have a will and powers of attorney in place.

4. Picture your best retirement. Individuals in this group might be getting a clearer vision of their work-free future. Have you thought about whether you’d like to work beyond retirement age, or whether you’re in a position to retire early? These things may play into your income and tax planning.

5. Think about downsizing. For some, having a smaller home can help to free up assets that will be needed in retirement. A smaller home can also be easier to care for. A financial professional may be able to help you decide when is an opportune time to make a move.

6. Watch out for lifestyle creep. For many Canadians, these are our highest earning years. But adding new lifestyle expenses now may raise your retirement budget and expenses. It may also decrease your retirement savings.

For a further discussion around your retirement and investment planning strategies, please contact me, Neil Mardian, CFP, FSCI, CIM, M.Sc. (Mgmt) 403-504- 3026

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