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Boomer retirement planning: not everyone safely on board!

September 12, 2014 by InvestingForMe

Traditionally many of us have come to imagine retirement as that point in time when we achieve ultimate freedom (aka “Freedom 55!”) where we can finally stand on our own in complete financial control of our life – with no more bosses and no more money-lenders.


As an advisor and planner, I’ve witnessed first-hand when people have reached that ultimate point of freedom with the relief, contentment and excitement that often accompanies it. And I have been amazed just how many times individuals that are able to retire actually decide not to. For these people just simply knowing they can retire is really what matters to them. Their freedom-feeling is not about escaping their actual work or the people they work with. It’s about the huge sense of relief they feel from that constant financial stress they’ve been carrying for years.

But that stress is magnified tenfold, however, if retirement is fast approaching and you’re not financially ready. And this scenario, unfortunately, is all-too common today for many boomers (and often for good reasons!), and brings with it the complete opposite feeling of ultimate freedom. Many boomers still have financial obligations and need to keep working to make mortgage and car payments and continue supporting their families as they near retirement age. In this scenario you’re more likely feeling overwhelmed and stressed – and like an indentured servant!

Saving for retirement: a tough business

Baby boomers are having a much tougher time attaining their financial freedom than did their parents’ generation. And the reasons for this are numerous! Fewer of us have a company pension plan, more of us are carrying larger mortgages for longer, more of us are reaching retirement age with a mortgage, our incomes have not kept up, and the cost of everything from housing to education has sky-rocketed!

In fact, here are some interesting stats that speak to the tough realities many boomers find themselves facing in this retirement planning stage of life:

  • 50% of baby boomers still have a mortgage.
  • 51% of boomers expect to still have a mortgage when they retire.
  • 73% of boomers don’t think they can retire until they’re 67 or older.
  • 47% of boomers, aged 55 to 64, have never saved at all for their retirement.

And according to a recent BMO survey of future retirees, on average boomers have only saved $258,000 for their retirement, which is $562,000 short of the $818,000 they say they need! So, what’s happened?

Today’s retirement realities

The idea of retirement today means different things to different people. The trend for current/future retirees is no longer just quitting work and living happily ever after. Truthfully, for over half of today’s retirees, retirement is simply a change in careers/bosses as they continue to work.

Here are a few more stats from a recent Scotia bank survey of future retirees that illustrate the new realities of retirement today:

  • 42% say they’ll bid farewell to their boss and quit working completely – never to return (and they’re counting the days!).
  • 30% say they want to stay mentally active, and working gives them that stimulation (mentally and socially), so they’ll continue to work by choice, even after they officially retire.
  • 28% say they will continue to work after they have officially retired. Why? Well, because, financially speaking, they have no choice. They have to keep working to pay the bills!

So, the question for many becomes what type of retirement are you looking at? The first two options above are only going to be possible if you’ve been successful with your finances – saving and investing!

But if you’re like many boomers, you’re still trying to get your retirement plans in order, and need help.

Where do you begin?

Answer: Start by creating a workable retirement plan!

Hey, let’s face it. It's tough to make long-term plans. Life doesn't move in a straight line. Financial goals change. Investing gets more complicated. And your retirement seems way off in the future. Or so you think! And then suddenly it's right around the corner, just 5 - 10 years away! Will you be ready when it arrives? Not sure?

Well, you’re not alone. You need a plan!

Start here

In the coming weeks we’ll lay out a step-by-step process in a series of new articles called Planning for Your Retirement that you can easily follow to create a workable retirement plan that’s personalized to you and your financial circumstances.

Tune in next week for the first article in this series – Retirement Planning: Start with the right approach.



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