A slacker’s guide to retiring

Opinion

Before generation Z and millennials — sometimes called generation Y — came the original, singular-letter-titled demographic, generation X.

Sure, baby boomers truly mark the start of marketing-driven, generational nomenclature that dominates many discussions on social, political and economic trends.

But gen Xers, individuals born between 1965 and 1980, and among the smaller age groups in Canada — arguably punch above their collective pop cultural weight.

That will likely be true for retirement too as they currently stare down this looming life milestone — be it with confidence, uncertainty, stereotypical cynicism and, perhaps, fear.

“With my clients in their 50s and late 40s, I do see some panic,” says Chad Harmer, managing director of Harmer Wealth Management in the Greater Toronto Area.

“It’s not unique to them, but the pressure of time is especially starting to weigh.”

A recent RBC retirement survey found this age group is likely among the most anxious about their financial futures with 54 per cent of respondents between ages 43 to 58 indicating it was causing them worry.

What’s more, 56 per cent indicate that retiring comfortably is their top investment goal — higher than baby boomers (50 per cent) and millennials (46 per cent).

Although anxious about having enough money, the survey also reveals these Canadians are “keenly focused on making the most of the money they have to retire comfortably,” says Craig Bannon, a director of financial planning support at RBC.

“And to get there, they are doubling down on paying off debt and putting money toward investing to build savings.”

The challenge, however, is they have many competing priorities.

“Many gen X clients are still in, or only now just exiting, those years of raising kids where they are helping with tuition or getting them established as adults,” says Grant White, portfolio manager and certified financial planner with Endeavour Wealth, iA Private Wealth, in Winnipeg.

Some of these graying parents even might have dipped deeply into their home equity lines of credit, leveraging the capital built up in their homes over the last two decades, to help their adult children get their first homes.

Fortunately, for many generation Xers, real estate is likely their biggest financial advantage, at least compared with generations to come afterward: millennials and gen Z.

Those lucky enough to have purchased homes in the 2000s or even earlier have made out well with the hyperinflation of real estate over the last decade or more. That is, of course, if they did not keep up-sizing homes, in turn, taking on larger and larger mortgages.

That could be the case for many, Harmer says, noting Canadians, per capita, have much more debt than Americans. Canada Mortgage and Housing Corporation (CMHC) data further shows that about 75 per cent of this household debt is a result of mortgages.

The RBC survey alludes to the idea that many generation Xers may still be grappling with debt — mortgages included — finding 69 per cent consider being debt-free equates with financial independence. That’s the highest percentage among the three age groups polled.

This is understandable in light of the recent rise in interest rates, which has eaten into many household’s cash flows and ability to save. Generation X is not alone in this sense of feeling pinched. Aging millennials are feeling similarly anxious about retirement, the study found, just a little less so.

But generation X “are unique a bit in that their adult lives have been marked by many challenging market pullbacks,” says White, an aging millennial himself.

Notably, they might have seen their investment portfolios slashed by 30 per cent or more in the Financial Crisis in 2008/2009. Some likely sold their investments in a panic at the time and did not return to the stock market until it started really roaring in the mid-2010s.

Then came COVID-19, and its economic uncertainty and market volatility. Lots of other booms and busts have come along the way too — from the tech bubble of the 2000s to, more recently, cryptocurrencies to marijuana stock crazes — which have helped make fortunes and destroyed them within a matter of months.

“These folks have been bombarded by a lot of stuff over the last 20 to 30 years,” White says. “All of this is to say that some may be facing a funding gap as it relates to retirement.”

Of course, you don’t know how big that gap is unless you look.

Financial planning “involves looking under the rock, and that can be scary,” Harmer says.

But it’s worth looking through the lens of a financial plan to get a firm grip on what needs to be done: be it saving more, making lifestyle changes to reduce costs, working longer than anticipated, investing more aggressively, or all of the above.

Bannon says what’s important is not to get too stressed out about it all — though don’t avoid the problem either. Meet with a financial adviser sooner than later.

“Having a conversation about where you are today and where you hope to be down the road with an advisor can be immensely helpful to ease stress about falling behind and help you explore a range of options you may not have considered,” he adds.

White agrees, given many of his clients are nearing retirement.

“Those people are fine,” he adds about these generation X clients.

Yet if you’re being dogged by retirement worries, this is no time to be cynical and slack off — or you just might find yourself working until you die.

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com