Jennifer Black identifies emerging trends that will impact financial planning as the “Boomer Generation” crosses the retirement threshold
“As Canadians plan for their financial needs in retirement, there are several emerging trends that need to be considered,” says award-winning financial advisor Jennifer Black, president of Dedicated Financial Solutions. “The Baby Boomer generation is now crossing the retirement threshold, and we’re seeing a new kind of ‘Young Retiree’ who envisions a very active and comfortable retirement, yet they may not be taking some important trends into consideration as they plan for their leisure years.”
Black has identified some emerging retirement trends, and how they may impact retirement planning:
- Seniors are living longer
According to Statistics Canada, the average 65-year-old Canadian near the beginning of the 20th Century could expect to live about 13 more years. A hundred years later in the new millennia, that figure has jumped to almost 20 years.
CONCLUSION: Retirement funds have to be sufficient to accommodate an increasingly long life span.
- The retired population is growing, and accelerating rapidly
According to Statistics Canada, between 1981 and 2005, the number of seniors in Canada almost doubled, increasing from 2.4 million to 4.2 million. “The very first baby boomers turn 68 this year,” says Black, “The average retirement age of Canadians is 62, so many boomers have already entered retirement, while many others see it on the horizon. By next year, 1 out of every 5 Canadian adults will be 65 or over.”
The number of Canadians entering their retirement years is accelerating. Between 2006 and 2026, the number of ‘Young Seniors’ aged 65 to 74 (people just retiring) is projected to almost double.
CONCLUSION: In the future, there will be an increasing demand for resources geared to a growing pool of retirees. This demand could potentially impact supply/availability and ultimately, pricing. Sound financial planning should make provision for increased prices for retirement-related resources and services.
- Today’s retiring population is different from earlier generations —
Seniors themselves are changing. Financially, they are better off than they were twenty-five years ago. They’re better educated, Internet savvy, and active. Seniors are also starting to be seen as different sub-sets within their overall category. Characteristics of ‘Young Seniors’ aged 65 to 74 differ dramatically from their older counterparts.
CONCLUSION: Retirement funds for ‘Young Seniors’ need to be sufficient to accommodate a more active lifestyle than in times past.
- Health challenges faced by long-lived seniors can strain retirees’ financial resources –
As Canadians live longer, they’ll need to plan for what may be extended periods when special care and living arrangements are needed. Planning should also take rising care costs into consideration.
CONCLUSION: Contingency funds need to be established to provide for long term care/ special needs in retirement.
- Many Canadians are retiring with debt
In 2009, 34% of retired individuals aged 55 and over held mortgage or consumer debt, according to Statistics Canada. The median amount owed by these individuals was $19,000. The incidence of debt was much higher (almost double) among those in the same age group who had not yet retired.
Divorced retirees (43%) had the highest incidence of debt. They were followed by people in a couple (35%), those who never married (30%) and widows or widowers (28%). Also, divorced retirees had the lowest annual median income and net worth, compared with all other groups.
Retirees with debt had a median annual household income of $42,000 and a median net worth of $295,000. Overall, their debt was equivalent to about 7% of their total assets.
Older retirees were significantly less likely to have outstanding debt. Just under one-half (48%) of retirees aged 55 to 64 had some form of debt, compared with 20% of retirees aged 75 and over.
CONCLUSION: “Many people approaching retirement age may be delaying their retirement plans due to debts,” concludes Black. “Today’s low interest rates make this a perfect environment to pay down debts quickly. Plans for eliminating debt should be part of your overall financial strategy, both leading up to and after retirement.”
Black’s company was recently recognized by the Mississauga Board of Trade’s Business Excellence Awards, as the 2014 Small Business of the Year. “We’ve built our business on satisfying the unique needs of each individual customer,” says Black. “We listen to our clients’ needs to understand what their goals and challenges are, and then help them choose a path to change their financial future.”
About Dedicated Financial Solutions
Dedicated Financial Solutions (DFS) is an independently owned and operated Financial Planning company based in Mississauga. The firm is owned by President Jennifer Black and vice president Janet Baccarani, both Certified Financial Planners with over 27 years combined experience, managing a team of Financial Planning specialists.
DFS differs from most other financial advisors, since they first focus on determining their client’s personal or business goals, and then create a customized financial plan that will deliver the best result for that individual client. The company has earned the Consumer’s Top Choice Award as Mississauga’s Top Financial Planner for the last two years. Baccarani and Black have been awarded ELITE™ status as one of Canada’s top eight financial advisor teams based on an independent survey of their customers by Elite Advisors Canada Inc. Dedicated Financial Solutions earned the Mississauga Board of Trade Business Award of Excellence as 2014 Small Business of the Year.