According to a recent TD survey, more than two-thirds of Canadians between the ages of 35 and 54 say they’re not saving enough for retirement, and one in four say not being ready for retirement is keeping them up at night. As a result, the majority of Gen-X Canadians (60 per cent) who aren’t saving enough do not expect to be able to retire on time and half as many (29 per cent) expect to still be working in some capacity during retirement.
“There are different reasons why people struggle to save for retirement, but it’s never too late to get started,” said Jenny Diplock, Associate Vice President, Personal Savings and Investing, TD Canada Trust. “Having a plan in place can definitely help – whether it’s getting started or modifying your existing strategy to help achieve your goals, there are a number of things you can do now to help put your mind at ease and help prepare for the next phase of life.”
The top barrier preventing Gen-Xers from retiring on time is everyday financial demands like living expenses, mortgage or rent, and childcare costs (61 per cent), followed by existing debt (42 per cent) and major unexpected life events such as divorce or death of a spouse (19 per cent). Given these challenges, it’s not surprising that more than half (54 per cent) of Gen-X Canadians surveyed say they need help meeting their financial goals, with a majority feeling guilty about not saving enough for retirement and wishing they had started earlier.
As more than three-quarters of Gen-Xers advise the next generation to start saving earlier, TD offers some additional advice to help Canadians get on track to achieving their savings goals and become retirement-ready.
Track your spending
More than three in five (61 per cent) Gen-Xers attribute everyday financial demands as the reason they don’t expect to retire on time. Keeping a record of your spending is a simple way to see where your money goes each month and look for ways to cut back on expenses to free up funds and help boost your savings.
Once you’ve identified some monthly savings, consider arranging for those funds to be transferred automatically into a Retirement Savings Plan (RSP) or Tax-Free Savings Account (TFSA). As you identify even more savings over time, you can increase the amount transferred automatically each month. Remember to also factor in any additional money you receive throughout the year such as annual raises or bonuses. And take advantage of digital tools, such as the real-time money management app, TD My-Spend – the app takes the hard work out of tracking your spending and savings and does it all for you, with instant notifications about whether your spending is on track and features that make it easy to see how much of your money you spend in specific categories.
Tackle your debt while also saving
Four in ten (42 per cent) Gen-Xers attribute existing debt as a top reason that prevents them from retiring on time. While everyone’s financial picture is different, there are a few key steps you can take immediately to help pay down debt while building up savings:
- As you start tracking your spending and becoming more in control of your finances, take a look at where your money is going and determine where you can free up cash flow to go towards paying down debt.
- Seek out groups and communities – either online or in your neighbourhood – where you can sell stuff you no longer use or need, and use those funds to pay down your debt. One person’s junk is another person’s treasure.
- Look for tips and tools online, like the TD Debt Repayment Calculator, to help you become organized by determining how much you owe and prioritizing what to tackle first. You can stay on top of your debt easier when you have a repayment plan in place.
Put the right tools in your (financial) toolbox
Diplock says the best place to start, no matter what someone’s retirement savings may be, is to speak with an advisor who can help find the best options for each individual’s specific goals and circumstances. An advisor can also help people review their current expenses, look for opportunities to free up cash flow to help build their retirement funds and determine what products are best for your specific goals.
According to the survey, of Gen-Xers who are already saving for the future, the majority (64 per cent) rely on RSPs to help fund their retirement. And RSP season is the perfect time to refresh your portfolio and ensure it’s on track to become retirement-ready. For example, the TD Retirement Conservative Portfolio and TD U.S. Retirement Portfolio are specifically designed to help address the needs of pre-retiree and retirees and to consider the new realities of the retirement investment landscape. For more information on these and other TD products, please visit tdcanadatrust.com.
About the TD RSP Survey
A survey of 623 non-retired Canadians between the aged of 35 and 54 (Generation X) 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 +/-3.9%, 19 times out of 20.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America. Mutual Funds Representatives with TD Investment Services Inc. distribute mutual funds at TD Canada Trust.
SOURCE TD Canada Trust