A Fifth Of Canada's Working Baby Boomers Have Nothing Saved For Retirement

Charlemagne · May 11, 2018

05/11/2018 12:19 EDT

A Fifth Of Canada's Working Baby Boomers Have Nothing Saved For Retirement, According To Survey

But working longer won't make much of a difference if they're paying off debt.

By Emma Prestwich

A shocking number of Canadians in the generation closest to retirement have no money saved for their golden years, according to a new survey.

The study, which was conducted for Franklin Templeton Investments Canada, found that one-fifth of pre-retiree Canadian baby boomers have put away nothing for retirement.

The survey defined baby boomers as those ages 53 to 71, which closely matches Statistics Canada's definition of that generation, those born from 1946 to 1965.

And considering that nearly a third of Canadians were identified as baby boomers in 2011, a large number of people are approaching their years away from the workforce with no savings.

More than a third of retired baby boomers in the Franklin Templeton survey opted to leave the workforce later because they didn't have enough money, a practice that is becoming increasingly common.

And while working longer might seem like a good solution, especially if you're healthy and you enjoy your job, it means little for your retirement if you're only servicing debt, which is the case for many people.

Among boomers who either didn't take full advantage (or were unaware of) the contribution limits in their registered retirement plans, nearly 30 per cent said they were focused on paying off debt instead of saving for retirement.

The average Canadian owed $22,837 in the fourth quarter of 2017, according to a report from credit agency Equifax, an increase of three per cent over the year before.

An infographic from Franklin Templeton Investments shows that about half of Canadians aged 50 to 65 have $100,000 or less saved for retirement.

Three-quarters of the pre-retiree baby boomers surveyed said they felt anxious or stressed about their retirement savings or investments, and 40 per cent said they expected to rely on a government pension as their primary or secondary source of income.

And that may end up being the case; half of those people surveyed who had already retired said their government pension was their primary or secondary source of income.

Baby boomers who contribute to the Canada Pension Plan can at least bank on receiving more money in the coming years. Starting in 2019, the CPP will start to grow to replace one-third of your average work earnings, up from one-fourth. But the higher benefits will also come with higher contributions.

And all hope is not lost if you're a cash-poor boomer. T.E. Wealth has some good tips, including socking away occasional infusions of money like tax refunds and raises, getting a side gig if you can, and ensuring you have insurance to deal with unexpected events.

https://m.huffingtonpost.ca/2018/05/11/a-fifth-of-working-baby-boomers-have-no-retirement-savings_a_23431846/?ncid=fcbklnkcahpmg00000001

oil&gas · May 11, 2018

A lot of those boomers own their residences I suspect.
If desperate for retirement and hobbying money they
have the option of selling their home. That hopefully
will help make housing more affordable.

rhuarc29 · May 11, 2018

oil&gas said:
A lot of those boomers own their residences I suspect.
If desperate for retirement and hobbying money they
have the option of selling their home. That hopefully
will help make housing more affordable.

Well, the infographic says 1 in 3 planning to retire within five years still have a mortgage.
I don't even understand how you could still have a mortgage after 45 years of working unless you are a very poor financial planner.

Smallcock · May 11, 2018

rhuarc29 said:
Well, the infographic says 1 in 3 planning to retire within five years still have a mortgage.
I don't even understand how you could still have a mortgage after 45 years of working unless you are a very poor financial planner.

When Baby Boomers were teenagers back in the 70s, they were called the "Me Generation" for their narcissism. https://en.wikipedia.org/wiki/Me_generation

It looks like at least 1 out of 5 ran with the spoils of easy money and decadence without any concern for the future.

bazokajoe · May 11, 2018

Glad I'm not in that group.

The "Bone" Ranger · May 11, 2018

rhuarc29 said:
Well, the infographic says 1 in 3 planning to retire within five years still have a mortgage.
I don't even understand how you could still have a mortgage after 45 years of working unless you are a very poor financial planner.

Especially considering you would have paid one fifth or less of current house prices which means your initial mortgage was much lower too.

Occasionally · May 12, 2018

There will be some part of those 1/3 of retirees with a mortgage who purposely did that. There will be a portion of the population playing the real estate flipping game by trading up assuming things keep going up.

So these people are purposely being cash poor, in return (risk) for paper gains. They have the assets and equity and know what they are doing. Not everyone downsizes. Some upsize or buy cottages and such. Then when they finally cash out and move to a small home, then the cash hoard will pile up.

I have no idea how many of these 1/3 do that.

But for the portion that are half broke when they are retiring and still have a mortgage when it should have been done 10 years ago, somethings wrong.....

If someone never had a good job enabling them to bank money, I can them in a long term pain of refinancing. It's like someone going overboard on credit cards. You dug yourself a hole, which you may be able to catch up to. Some sympathy can be given assuming they were honest hard working folks who got burned.

However, for those old people who had decent jobs and had the ability to save (unlike above person with lousy job), they "should" have budgeted better. And especially if it was a dual income family. Perhaps they had 5 kids so all the money was spent on raising them too. A possibility.

Unfortunately for the people who budget better, our taxes go to monthly payments and social cheques. I can understand giving some to a hard worker who tried their best and couldn't save. But for those asses who blew all their money despite having good incomes, IMO you should count the lucky stars on your ass because at senior ages you still get payouts to keep you afloat when in reality you should have been able to stand on your own two feet.

K Douglas · May 12, 2018

This is what happens when you tax the middle class too high. They can't save enough for retirement.

apoptygma · May 12, 2018

K Douglas said:
This is what happens when you tax the middle class too high. They can't save enough for retirement.

This is what happens when people who earn a half-decent wage are fiscally irresponsible and blow all their money when they earn it instead of thinking they might need some tucked away for when they don't want to work anymore.

K Douglas · May 12, 2018

apoptygma said:
This is what happens when people who earn a half-decent wage are fiscally irresponsible and blow all their money when they earn it instead of thinking they might need some tucked away for when they don't want to work anymore.

I'm not disagreeing saying that some of these folks were fiscally irresponsible during their lifetime. Or just plain lazy and refused to work hard. That's inevitable in any society.

Butler1000 · May 12, 2018

One thing Trudeau has right is changing CPP. Raising it to 33% will add a good bit. Might even be a good idea to get it up to 40% over the next several years.

Occasionally · May 12, 2018

K Douglas said:
I'm not disagreeing saying that some of these folks were fiscally irresponsible during their lifetime. Or just plain lazy and refused to work hard. That's inevitable in any society.

Also a sense of being someone who focuses on themselves first.

Don't get me wrong, I agree with anyone who says you can't take the money with you.

However, some people spend for today to maximize immediate gratification in hopes they squeak by in the future. They will live tooth and nail on that shitty $1,000/mth government dole out. If they drop dead with $0 in their bank account, but they lived how they wanted and maxed out their earnings, they are happy.

Some people like me make good money, but will never spend it all. I live more modestly, and am someone who wants to die with a pile of assets. It's not only a sense of achievement, but also gives opportunity to give away assets to family when I kick the bucket. I don't need to take 2 trips to Mexico, max out my credit cards buying useless stuff, or buy sports cars to be happy.

Although I'll already be dead, it makes me feel good to die and give away money to nieces and nephews to help them out. They might already be 30 years old and maybe they don't need a helping hand, but one way to keep a family tree happy and humming along is to be financially responsible and pass on earnings to the lower branches so they hopefully will never be broke.

Family trees can be broken when money goes awry and everyone treats it like every man for himself. Spread the wealth among family.

bigshot · May 13, 2018

K Douglas said:
This is what happens when you tax the middle class too high. They can't save enough for retirement.

I look at the amount of tax that a family paid in 1960, and compare this to the level of taxation today. The ever increasing amount of tax that we all pay wipes out much of the resources that people have to pay down mortgage debt and to put aside funds for the future. As governments take an ever increasing amount of your earnings, you are left with fewer resources that can be put aside.

I've been fortunate in the sense that I've lived a comfortable life and am well prepared to take care of myself in the future. I agree with all of the posters above who say that much of this lack of preparation is self induced, but it is a fact of life that we have more and more of our earnings taken away by governments that believe that they have first call on our money...

james t kirk · May 13, 2018

Occasionally said:
Also a sense of being someone who focuses on themselves first.

Don't get me wrong, I agree with anyone who says you can't take the money with you.

However, some people spend for today to maximize immediate gratification in hopes they squeak by in the future. They will live tooth and nail on that shitty $1,000/mth government dole out. If they drop dead with $0 in their bank account, but they lived how they wanted and maxed out their earnings, they are happy.

Some people like me make good money, but will never spend it all. I live more modestly, and am someone who wants to die with a pile of assets. It's not only a sense of achievement, but also gives opportunity to give away assets to family when I kick the bucket. I don't need to take 2 trips to Mexico, max out my credit cards buying useless stuff, or buy sports cars to be happy.

Although I'll already be dead, it makes me feel good to die and give away money to nieces and nephews to help them out. They might already be 30 years old and maybe they don't need a helping hand, but one way to keep a family tree happy and humming along is to be financially responsible and pass on earnings to the lower branches so they hopefully will never be broke.

Family trees can be broken when money goes awry and everyone treats it like every man for himself. Spread the wealth among family.

I am the exact opposite of you.

I don't want to be the richest man in the cemetery. That makes no sense to me whatsoever.

t.o.leafs.fan · May 13, 2018

bigshot said:
I look at the amount of tax that a family paid in 1960, and compare this to the level of taxation today..

Lifestyles are so much more expensive as well. I grew up in a family with 1 car, 1 rotary phone, 1 13 station tv. My 'toys' as a 10yr. old and up were a soccer ball, basketball, baseball glove and hockey stick. We are just way more of a consumption and acquisition of goods society now.

bazokajoe · May 13, 2018

james t kirk said:
I am the exact opposite of you.

I don't want to be the richest man in the cemetery. That makes no sense to me whatsoever.

I agree,but you need some kind of savings for retirement because CPP & OAS just won't cut it.
It's a fine balance of not living under a bridge and enjoy your golden years without worry.

Jasmina · May 13, 2018

It may also be a reflection of the types of jobs that are more readily available in any given generation matched with cost of living. Back in my grandparents day there were more small business owners, and the cost of living reflected that lifestyle, you could afford to buy a home and feed your kids with the majority of incomes available. In my parents generation there was considerably more mid range businesses (logistics for example) and you worked there instead of starting your own company up, making decent-ish money to live off but not necessarily enough to save, you could buy a house but it was always a lay off away from being lost, now in this generation small businesses are gone (nearly) entirely, we have mostly big corps and minimum wage jobs (retail, tim hortons, banks) and the cost of living is not a true reflection of the average income. It's a mess and it is only going to get worse.

Occasionally · May 13, 2018

james t kirk said:
I am the exact opposite of you.

I don't want to be the richest man in the cemetery. That makes no sense to me whatsoever.

Sure it makes sense. Who wants to live paycheque to paycheque? Who wants to be so broke their livleihood depends on senior citizen monthly dole outs from the government?

Some people like me make decent money. Why blow it all?

In my family tree, having a good education, job and making good money is important. Not just for that person or family in particular, but also for spreading the wealth when they die so that the grandkids get some $$$ to help them out.

I think about my nieces and nephews all the time. Their parents do very well, but I'll still give them a cut of my will.

The reason why there's government deductions, pensions and stuff like that s because the government knows lots of people can't save. So doing this is like insurance. They take money off your paycheque and will give it back to in your 60s because they know if they don't do this and hope people can control their own money (no deductions), a lot of people will spend every penny they have and be broke.

People should also save for a rainy day because who knows when someone will get fired. Some people do. Some people don't. Some people get fired and don't give a shit because they have savings to last a long time. Some people get fired and scramble to find a job ASAP because they have nothing in the bank and credit card debt at 24% interest payable at the end of the month.

Occasionally · May 13, 2018

Jasmina said:
It may also be a reflection of the types of jobs that are more readily available in any given generation matched with cost of living. Back in my grandparents day there were more small business owners, and the cost of living reflected that lifestyle, you could afford to buy a home and feed your kids with the majority of incomes available. In my parents generation there was considerably more mid range businesses (logistics for example) and you worked there instead of starting your own company up, making decent-ish money to live off but not necessarily enough to save, you could buy a house but it was always a lay off away from being lost, now in this generation small businesses are gone (nearly) entirely, we have mostly big corps and minimum wage jobs (retail, tim hortons, banks) and the cost of living is not a true reflection of the average income. It's a mess and it is only going to get worse.

Also a reflection of people's spending habits.

I bet most of the people on this board (clients at least) are probably middle aged. We grew up in the 70s or 80s as kids, and had modest family life. Parents saved, annual trips to wherever was pretty rare and the dad drove a GM or Ford which was nothing to brag about.

Now, real estate prices are high and have outpaced income. ALTHOUGH interest rates are rock bottom at about 3%. Back then parents were paying probably 10%.

But people's priorities are more about buying shit. Back then no parents and no people getting their first jobs were itching to max out credit cards, or saving money to NOT buy a home, but to buy the equivalent of iPhones, and prioritizing BMW 3-series cars when they are 27 years old as opposed to finding a low end starter condo and a used Honda Civic. And people now staying home in their parents basements in their 30s. Claimed to be broke and real estate is too far to buy, but somehow doesn't want to look for properties and jobs in smaller cheaper cities, and always seems to have money to spend $20 a day on Starbucks and lunch and Audi A3 payments.

Jasmina · May 13, 2018

You totally just summed up my childhood lol.

Occasionally said:
Also a reflection of people's spending habits.

I bet most of the people on this board (clients at least) are probably middle aged. We grew up in the 70s or 80s as kids, and had modest family life. Parents saved, annual trips to wherever was pretty rare and the dad drove a GM or Ford which was nothing to brag about.

Now, real estate prices are high and have outpaced income. ALTHOUGH interest rates are rock bottom at about 3%. Back then parents were paying probably 10%.

But people's priorities are more about buying shit. Back then no parents and no people getting their first jobs were itching to max out credit cards, or saving money to NOT buy a home, but to buy the equivalent of iPhones, and prioritizing BMW 3-series cars when they are 27 years old as opposed to finding a low end starter condo and a used Honda Civic. And people now staying home in their parents basements in their 30s. Claimed to be broke and real estate is too far to buy, but somehow doesn't want to look for properties and jobs in smaller cheaper cities, and always seems to have money to spend $20 a day on Starbucks and lunch and Audi A3 payments.

A Fifth Of Canada's Working Baby Boomers Have Nothing Saved For Retirement

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