TD survey reveals pre-retirees feel retirement
savings are being torpedoed by the younger generation
TORONTO, Jan. 18, 2017 /CNW/ - The boomerang effect is in
full swing as many millennials continue to lean on the boomer
generation for financial support, according to a recent TD survey.
At a time when the older generation should be preparing for
retirement, many instead are experiencing a "déjà-boom" effect, as
children or grandchildren return to the family home or need
financial assistance.
"As a parent or grandparent it's natural to want to help our
kids and grandkids who may be facing financial challenges such as
finding full-time employment or paying their day-to-day expenses,"
says Rowena Chan, Senior Vice
President, TD Wealth Financial Planning. "It's important that this
desire to help is balanced with the goals you have when it comes to
retirement."
Overall, 62 per cent of the boomer generation feels the "déjà
-boom" effect is preventing them from saving enough for retirement.
The survey also revealed that the tradeoff between providing
financial support and saving for retirement is placing boomers
under a considerable amount of financial stress. It's not
surprising that more than half (58 per cent) of boomers report
feeling financially stressed and say their retirement savings are
being impacted by their extended financial support of boomerang
kids, as one in four Canadian boomers admit to supporting their
adult children or grandchildren.
"While the déjà-boom effect may be an unexpected event in
retirement planning, it is important for pre-retirees to remember
that it's not too late to plan for the future and achieve their
goals. A lot can be accomplished in the 10 to 15 years before
retirement and planning ahead is a key step in making the journey
as smooth as possible," continued Chan.
The added financial stress brought on by this arrangement isn't
unnoticed by millennial offspring. In fact, almost half of
millennials (44 per cent) who depend on their boomer parents or
grandparents for support are aware that their financial situation
will mean fewer retirement savings, while 43 per cent of
millennials admit they are willing to cut costs when facing
economic difficulty before asking for financial help.
"Both generations recognize this isn't an ideal situation, which
means important conversations need to take place so everyone is on
the same financial page," says Chan. "Sitting down with someone who
understands different family dynamics is a great first step to set
defined goals and establish a financial action plan to best serve
both generations."
TD offers the following advice for boomer parents who are
working towards retirement and boomerang kids who want to be
independent:
Be Ready for Whatever Life Throws Your Way
Despite
this new reality, it is important to understand that your
retirement goals are still within reach. Meeting with a financial
planner and doing a goals-based assessment is key to determining
what your options might be for supporting your kids while keeping
your plans for retirement on track. Work with a planner to identify
your short, medium and long term goals, and make sure they align
with your kids' goals so everyone is working toward the same
overall objective.
Negotiate the Return
Discuss how everyone can
contribute to the household budget and operations. For example, you
may be able to cover the basics like room and board, but other
living expenses like cell phone bills, car payments, or financial
support for recreational activities are additional costs that could
be covered independently. Also, consider having everyone pitch in
on the costs of running the day-to-day operations and dividing the
household chores.
Prepare to "Relaunch"
Whether it's your newly
married daughter and her spouse and child, or your son who recently
graduated and has moved back home, there are plenty of
opportunities to educate all family members on the importance of
being fiscally responsible and working toward financial
independence. Invite them to join in your financial conversations
to discuss how to navigate their current circumstances and
establish good financial habits. When meeting with a planner, look
for someone who has experience working in multi-generation family
dynamics in order to receive advice that is specific to your
particular situation. Don't forget to ask about any offerings or
incentives available to give an added boost to your planning.
Decide When to Release
As you and your offspring are mapping out financial action plans,
identify a date when you will no longer be financially committed to
each other. As you approach this date, set up a series of
mini-goals that will allow you to free up funds to divert toward
your retirement savings while ensuring that your kids are meeting
the savings targets they set in their own financial plan. Work with
your planner to ensure these goals are S.M.A.R.T.: Specific,
Measureable, Agreed upon, Realistic and Time-based. S.M.A.R.T.
goal-setting provides the preparation, focus and motivation needed
to achieve your objectives and boomerang yourself to success.
The road to retirement can have a lot of unexpected curves.
Following these tips and having open conversations can help
navigate the journey to becoming Retire Ready. For more
information, please visit td.com/retireready or join the
conversation on Twitter by following hashtag #RetireReady.
About the TD Survey
A survey of 523 Millennials (ages
18 to 34) and 365 non-retired Boomers (ages 52 to 70) was completed
online between October 21 and November 3,
2016 using Leger's online panel, LegerWeb. A
probability sample of the same size would yield a margin of error
of +/-4.3%, 19 times out of 20, and +/- 5.1% 19 times out of 20
respectively.
SOURCE TD Canada Trust