Re­tire­ment sav­ings for Boomers

It’s never too late

Ottawa Citizen - - RETIREMENT - PETER KEN­TER Post­media Con­tent Works

Born be­tween 1946 and 1964, Canadian Baby Boomers are of­ten en­vied as a golden gen­er­a­tion that took ad­van­tage of ev­ery op­por­tu­nity a vig­or­ous post­war econ­omy of­fered. But Boomers are a di­verse group. It’s true that some have amassed healthy nest eggs, but many oth­ers are just start­ing to think about re­tire­ment sav­ings. For them, the win­dow for get­ting their post-work fi­nan­cial house in or­der may be clos­ing, but it’s not too late to make re­tire­ment sav­ings a pri­or­ity.

“The youngest Boomers are now in their early 50s,” says D’Arcy McDon­ald, vi­cepres­i­dent, per­sonal sav­ings and in­vest­ing, TD. “They’re of­ten in a unique place. They may be in their high­est earn­ing years and they’re on the heels of a 10-year bull mar­ket. On the other hand, the chances are high that they will be sup­port­ing an el­derly par­ent or have a child re­turn home fol­low­ing univer­sity. There are dif­fer­ent de­mands on their re­sources than on any other gen­er­a­tion, so they have big choices to make to help them re­tire ready.”

TD fi­nan­cial ad­vis­ers across the coun­try ask their clients what re­tire­ment could look like for them. Will they live in the city? Will they sell their cur­rent home and down­size? Will they con­tinue to work? Will they travel? Will they need to con­tinue to sup­port chil­dren or other de­pen­dents?

Life­style choices such as con­tin­u­ing to work, be­gin­ning a sec­ond ca­reer, turn­ing a hobby into a pro­fes­sion or down­siz­ing their home can help boost in­come.

“My aunt turned her base­ment into a rental unit that gives her pre­dictable monthly in­come,” says McDon­ald. “One of my friends drives for a car-ser­vice com­pany a dozen hours a week to earn some ex­tra spend­ing money.”

He also notes that some peo­ple tend to spend the most money on leisure and travel right af­ter they re­tire.

“How­ever, that can be a del­i­cate time for a re­tire­ment plan,” says McDon­ald. “You want to avoid spend­ing too much money too early and dis­pro­por­tion­ately af­fect­ing the fu­ture of your in­vest­ments.”

But there are plenty of things that peo­ple ap­proach­ing re­tire­ment can do to make their fu­ture bet­ter. “We help them to make the most out of their prime earn­ing years,” says McDon­ald. “Of­ten it’s sim­ple ideas that can make the most dif­fer­ence.”

For ex­am­ple, Boomers should set up a sys­tem­atic way to in­vest. They should con­sid­er­ing pay­ing them­selves first through sav­ing, even at the risk of main­tain­ing a mod­est de­gree of debt.

“There’s an idea that we need to pay down our debt first, but be­ing en­tirely debt­free rarely hap­pens for av­er­age Cana­di­ans,” McDon­ald says. “If they wait for that mo­ment, they may never be­gin in­vest­ing for re­tire­ment. We sug­gest they save for re­tire­ment while pay­ing down debt. If they can save lump sums and bonuses, or make sys­tem­atic sav­ings in their higher-earn­ing years, it’s de­sir­able to pass that into re­tire­ment sav­ings.”

An ef­fec­tive re­tire­ment plan would al­low re­tirees to at least meet their es­sen­tial needs, such as mort­gage pay­ments, rent, util­i­ties, health care and gro­ceries.

“If you can do that with sav­ings and with in­come de­rived from those sav­ings, CPP and OAS, you may be in a good spot,” says McDon­ald. “If you have am­bi­tions be­yond that, you may want to look at ad­di­tional op­tions.”

In­vestors might con­sider stock mar­ket-linked GICs. They might also look at mu­tual funds, which have be­come in­creas­ingly ver­sa­tile in re­cent years, of­fer­ing ev­ery­thing from con­ser­va­tive, low-risk prod­ucts with gen­er­ally pre­dictable re­turns to ag­gres­sive funds with higher risk, but with the po­ten­tial for higher growth.

Boomers would be wise to re­view and up­date their re­tire­ment plans reg­u­larly, even dur­ing re­tire­ment.

“Life and goals change,” says McDon­ald, “and you want to be sure your plan changes with it.”

Life and goals change, and you want to make sure your plan changes with it.


An ef­fec­tive re­tire­ment plan would al­low re­tirees to at least meet their es­sen­tial needs, such as mort­gage pay­ments.

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