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The generation known for its “me first” mentality is juggling the needs of their parents and children with their own future retirement needs, according to the “State of the Baby Boomer” study released today by BMO Financial Group. The study, conducted by The Strategic Counsel, reveals that three in five Canadian boomers with children aged 18 and over are providing some kind of financial support to their kids. Adding to the pressure, one-quarter of those boomers whose parents are still alive have one or more elderly parents that need their assistance on a regular basis.
Yet, while taking care of others is a big part of their lives, boomers are becoming increasingly concerned about their own future. Only 28 per cent of respondents are very confident that they will be financially secure in old age compared to 41 per cent of those under 40 years of age and 47 per cent 60 years and older. A third of boomers (32%) believe their standard of living is likely to drop in retirement, compared to 16 per cent of younger generation Canadians.
“Given the changing nature of retirement, particularly concerning longevity, it's no surprise that boomers are somewhat unsettled by what the future holds,” said Tina Di Vito, BMO Financial Group's Retirement Planning expert. “This is uncharted territory, so it's all the more important for boomers to start considering a variety of contingencies and lifestyle choices today. The key is to start reflecting on the range of options. Working with an investment professional is a valuable way to get started.”
According to the study, many baby boomers are having challenges balancing the books, with most still with debt (73%). Only 28 per cent of boomers say they have savings and investments of $100,000 or more. Almost one-in-five boomers who have not yet retired (19%), say they have no savings.
“It's never too late to start saving – especially for retirement. Today's 65-year old couple has a one-in-four chance of at least one person reaching 97 years of age. That means the average Canadian should plan to fund at least 20 years of retirement,” added Di Vito.
Despite the tenuous financial picture, almost all boomers surveyed (91%) are satisfied with their lives, with almost half (47%) indicating that they are very satisfied.
The national telephone survey of more than 1,500 people was conducted by The Strategic Counsel for BMO Financial Group between May 24, 2006 and June 5, 2006. The survey findings also include:
Boomers are willing, but reluctant to sell their houses to fund retirement
Ÿ Two-thirds of boomers (65%) are at least somewhat willing to sell their assets to fund retirement, although only a third (30%) are intending to use this strategy.
Ÿ The vast majority of boomers own homes (80%) and one-in-five (19%) own a second house.
Boomers are happy, but pre-boomers (age 60 ) are happier
Ÿ Pre-boomers are overwhelmingly satisfied with their lives (96%).
o More than half (56%) say they are very satisfied, and another 40% say they are somewhat satisfied.
Ÿ Pre-boomers report a sense of confidence in their financial futures, with half (47%) very confident in their financial security. This may be because their finances tend to be in order:
o 82% have paid off their mortgages
o 85% have prepared a will
o Almost half (45%) have no debt, and those with debt have less than $25,000 worth (35%).
BMO Financial Group and the New Retirement
Recognizing that retirement is changing for most Canadians, BMO Financial Group launched the Retirement Your Way web site in December, found at: www.bmo.com/retirementyourway. The site provides an overview of the new realities to consider in the retirement planning process, supplemented with case studies and external resources that are updated on an ongoing basis.
The site is also home to a unique transition tool for the new breed of 45-plus Canadians. With the understanding that retirement does not take place at a fixed point in time but is a transition between fulltime work and fulltime retirement, the online tool illustrates the impact that this transition can have on clients' retirement savings plans. BMO has also launched a number of income-oriented products and financial management services to help clients prepare for the new retirement and is currently developing other new retirement products and solutions for launch this year.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of more than $312 billion as at April 30, 2006, and more than 34,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and solutions. BMO Financial Group serves clients across
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