As life returns to normal post pandemic, industry experts have started to notice some changes in retirement trends. David Cravit explained these notable changes in a podcast by Fidelity Connects. According to him, the classic definition of retirement we have always known, is over.
These days most people turning 65 are not fully retiring; they will either go back to work full-time, part-time, or start their own small business. The main reason for this change is the skyrocketing cost of living, and the fact our lifespans continue to be extended. Living into your 80s, 90s, 100s will become the new normal with all the medical advances coming out today, “and we’re just getting started” said David Cravit. Now that people are living longer, the traditional 12-15 years of retirement you needed to save for has jumped to 25-30 years. This prolonged retirement horizon has experts projecting debt to climb as baby boomers age.
Another issue baby boomers are experiencing is the additional financial strain as many help their children purchase their first home. For Gen Z the bank of mom and dad is a huge factor. This has caused many baby boomers to delay their own retirement plans to help pay for their children’s living expenses. Intergenerational wealth will have to be factored into new retirement plans. “In terms of the next generation, 85% of those who have young children are worried about the future affordability of real-estate, when their children are ready for home ownership.”- Nearly Half of All Gen Z and Millennial Homeowners Needed Money From Parents to Buy. Written by Erin Nicole Davis. Published on June 16, 2021.
Many pre-retirees are considering buying homes with their adult children so the whole family can have a nice, affordable place to live. It is becoming more popular to have all generations living under one roof. Grandchildren have babysitters and aging parents will have caregivers when the time comes. “Manulife Bank’s bi-annual Debt Survey found that seven out of ten Canadians (71%) who don’t own a home worry about their ability to save up for one. Of those, 39% worry a lot about this.” – Nearly Half of All Gen Z and Millennial Homeowners Needed Money From Parents to Buy. Written by Erin Nicole Davis. Published on June 16, 2021.
Lastly, something we have seen continue with baby boomers both before and after the pandemic, is the fact that baby boomers are simply not saving enough for retirement. Unlike their parents who lived through the Great Depression and World War II, baby boomers have enjoyed living through good economic times with very few major downturns. This has left them more inclined to spend, and less inclined to save.
With people living longer and saving less, creative retirement strategies will have to be incorporated into financial plans; ensuring everyone lives a long, happy, and financially secure retirement.
As Financial Professionals, it is our job to help you navigate this very important aspect of your life. If you would like to speak to us regarding your financial plan, please don’t hesitate to contact us.
Have a great weekend,
Tracey and Paige
Article written by Paige Marshall.
Edited and approved by Tracey Marshall.
Sources:
“Post-Pandemic Retirement Trends” FidelityConnects Podcast with David Cravit https://www.fidelity.ca/en/expertinsights/podcasts/
“Nearly Half of All Gen Z and Millennial Homeowners Needed Money From Parents to Buy” Written by Erin Nicole Davis. Published on June 16, 2021.
https://storeys.com/gen-z-millennial-homeowners-need-parents-money/
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