Life Stage for Baby Boomers

Baby Boomers in Canada make up about 8.5 million people or roughly 25% of the Canadian population.  They are usually described as the group of people born between 1946 and 1965, often to parents who got married right after World War 2. 

Some Boomers have already gone into a retired lifestyle, with either a change to something part-time or outright retirement.  For most, they will be considering how they want to retire in the next dozen years.  This group, hopefully, is already looking at their lifestyle and adjusting it so they will be ready for the day when their retirement and income change their lives substantially.

What Boomers should be doing before retirement?

Retiring debt - Boomers should be paying down debt.  In their 50's they should be at the peak of their earning potential, and as children move away, the Boomers should have more money to pay off the mortgage, vehicle loans and all credit card debt.  Also important, Boomers should not be accumulating debt during the years leading into retirement.  Any purchase that will increase debt into the retirement years should be seriously reviewed, as cashflow will be lower in retirement and debt payments will be more difficult than they were during the working years.


Saving for retirement - Most people do not start to get serious about retirement savings until they are in their early 40's.  Boomers, who are already past this age, should have been saving for retirement in a pretty serious manner for at least a decade.  Remember, if you live to be 65 years old, there is a 50% chance of you living past 80.  This means that for moat people they need to save enough to support themselves for at least 15 years.  CCP and OAS should help, but retirement will be much more comfortable if you have savings/investments that provide you with more than the government does.  As you get closer to retirement, you will also want to consider lowering the risk level of your investments so that when another recession occurs your assets and retirement lifestyle will not be at risk.

Realistic expectations - With the economic shake up of 2008 & 2009, many retirees went back to work, even if only for 3 days a week, because they found out their savings weren't quite enough for them to live on.  It also made a lot of retirees look at the costs of owning a cabin, a large home, or annual exotic vacations.  While many people dream of a retirement when they can do whatever they want, the reality is most retirees will have to stick to a budget and make choices about how they spend their money.  Hopefully retirement can be a time where you get to spend more time doing what you want to do (family, charities, education...) rather than doing what someone else expects of you.  But it may also mean you can't do what you want in Mexico every year.

Planning for the future - As people's children grow up and leave home, their needs start to change.  A common occurrence is that empty nesters find their home is too big, and their yard requires too much care.  Retirees often downsize their home so that they no longer have to spend as much time or money on a home that is not being fully used.  Over the past decade condos have grown in popularity because empty nesters no longer wanted the responsibility and cost of maintaining a home that is too large for them.  As you prepare for retirement, it is important to consider that you may not be in that same home in another 10 years, as that may influence some of the upgrades you purchase for the home.

Also, it is important to do some estate planning and create a will for assets.  By planning ahead, you can help ensure that your loved ones are cared for and that they won't have to make difficult decision on your behalf after you are no longer able to help them.

Lastly, but most importantly, get a financial plan. And don't wait until you are retired to get one.  Get a financial planner to go through your investments, debts, and show you where you are and what needs to be done before retirement.  You might be pleasantly surprised to find out your finances are on the right track, but it could also be a wake up call that you need to do more before you decide to leave your job.  The point of a financial plan is that it lets you know where you are, and what you may need to do.  It will help you to determine how to do all the stuff mentioned above.

To all the Baby Boomers out there, you have some very big changes ahead of you.  Hopefully, most of them will be quite enjoyable, but enjoyable or not,  all of them will be easier with a bit of planning.  Jerry