‘Don’t stress,’ Gen-X: It’s not too late to set yourself up for a comfortable retirement

Reality Bites indeed 

It may sound as though Mohareb is exaggerating, but his sentiments capture the general unease gen-X say they’re feeling when it comes to their golden years. According to a recent report from RBC, 54 per cent of gen-Xers — those born between 1965 and 1980 and the group that makes up the largest portion of Canada’s middle-aged population — are worried they won’t have enough to retire comfortably. Some 82 per cent say they worry about paying for today while saving for tomorrow.

Mohareb, who describes himself as a civil servant, says he has investments, a registered retirement savings plan and contributes to his pension — but it’s not enough to shake the worry, especially after past losses.

“I actually worked for a major bank for a while and they had a very generous stock purchase plan, and then the economy crashed, and that lost 90 per cent of its value,” he says. “I’m not sure how good I’m going to end up, and I strongly suspect if I paid attention, it would probably ease my mind. But I’m still terrified that if I do, it’ll just be, ‘Oh no, it’s exactly as bad as you thought.’ ”

This worry is common among gen-X, says Craig Swistun, portfolio manager at Raymond James Investment Counsel, who points out that this cohort grew up with unique challenges. “For generation X, their investing experience has largely been in a low-interest-rate environment punctuated with significant market events: September 11, the financial crisis of 2008 and COVID.”

It’s also a generation trying to balance saving for their own future with caring for aging parents, which can be costly.

Age, stage and too much choice

Much of the anxiety is age-and-stage-related, says Celeste Merey, an investment adviser at Foster & Associates Financial Services. “I’m a gen-X-aged adviser and I’ve seen in my clients that we hit a certain age and the psychology kicks in. ‘This is my last run, my last 10 to 15 to 20 years before I want to retire and things get real.’ ”

Plus, says Merey, this generation has had an overabundance of choice when it comes to financial advice and investing, with advances in online technology and services.

“If you will look back at gen-X and everything we’ve faced, we were the first ones to become interested in self-directed investing, in the technology that came along to allow you to really do that at an affordable cost,” says Merey.

That has led, she believes, to having investments scattered everywhere, which can make it hard to consistently build wealth.

Use the time left wisely

“My first piece of advice is, don’t stress about ‘catching up,’ ’’ says Craig Bannon, director, Regional Financial Planning Support, RBC. “The most important thing is to do what you can to build up your savings — and one way to do that is to invest what you can, when you can,” he says.

Merey says taking all the various investments scattered around and creating a coherent plan is like moving from multitasking to single-tasking and will allow you to focus on one objective. She says that locked-in funds, like Locked-in Retirement Accounts (LIRAs), can be unlocked from age 55 and invested elsewhere if it makes sense for the client.

Then there’s the classic advice of accelerating payments. Swistun points out that older gen-Xers should consider how much they owe on a mortgage, and how they can pay that off faster by reducing spending elsewhere. “That’s something many people don’t want to hear. The good news? Many older gen-Xers may already be seeing a reduction in spending as their adult-age children are leaving the nest,” he says.

The great wealth transfer

An estimated $1 trillion is expected to be transferred from baby boomers to gen-Xers and millennials in the next two years. According to the Chartered Professional Accountants of Canada, it’s the largest generational transfer in Canadian history.

While that may offer some peace of mind for someone in the early stages of retirement planning, Merey says that if you’re 55 to 60 years old and expecting an inheritance, it’s not helping you plan financially, as you’re already on “that final runway toward (retirement).” “Expecting” is not a plan.

Merey says another way people can take control is to look at their own estate planning — usually a great trigger to look at your finances.

Mohareb isn’t going to let his worry about his retirement finances go unchecked.

“I’m going to send myself a reminder on my phone to contact my bank and get access to all of the detailed information. I’ll also contact my pension plan (provider) and say, ‘Hey, am I ever going to be able to get this, because I would like to retire.’ ”