Almost 50 per cent of Canada’s Baby Boomers are still paying their mortgage, says a poll from the Canadian Imperial Bank of Commerce (CIBC) conducted by Harris-Decima. The poll also shows that three quarters of boomers still hold some form of debt.
CIBC’s findings are alarming. Nearly half of boomers holding debt view their current level of debt as an obstacle to reaching their financial goals. According to older CIBC research released in January 2011, boomers’ top financial priority this year is planning for their upcoming retirement, but the recent poll on savings revealed that 30 per cent of boomers felt they weren’t very successful in building their savings.
Karen Blomquist, a mortgage associate with Mortgage Intelligence in Calgary, confirmed for the Calgary Herald that a large percentage of her clients who are baby boomers don‘t have their mortgages paid off. What’s even more surprising is that many first-time homebuyers are in the boomer group as well. “Baby Boomers like to live the good life, I guess. They spent a lot more time living than saving than maybe the previous generation. Perhaps more so than the previous generation, they’ve put money into RRSPs, stocks and mutuals that the previous generation hasn’t done because it wasn’t available.”
Baby boomers are between ages 45-64 years now, so it’s important to save money in these few years leading up to retirement as the boomer generation is huge and their financial security may become unstable after they retire. However, according to the poll, boomers with debt aren’t any more likely than other Canadians to be taking extra steps towards debt reduction.
“As boomers near retirement, managing and eliminating debt to allow for savings growth is a priority, and while it’s encouraging to see progress being made, these poll results show there is room for boomers to take further steps in this direction,” commented Colette Delaney, Senior Vice President of Mortgage, Lending, Insurance and Deposit Products at CIBC. “There are simple strategies those approaching retirement should consider, from making principal payments towards their mortgage to implementing a budget to help keep their debt repayment and savings on track.”
The first step is to create a plan, but only 21 per cent of boomers have sat down with an advisor in the last year to discuss strategies to reduce their debt more quickly. “Paying off your mortgage sooner can free up significant cash flow each month, which in turn helps you build your retirement savings faster and ultimately achieve the retirement you want for you and your family,” advises Colette Delaney.
So what should baby boomers do? Firstly, they should think about their future seriously and try to find a way to save money for retirement. They need a plan and should get more information about their options, so they should look for a specialist who will help them. "With the past, I have nothing to do; nor with the future. I live now,“ said Ralph Waldo Emerson. However, he clearly wasn’t a member of the Boomer Generation!