Boomers keep a keen eye on retirement

Retiring business owners between the ages of 50 and 69 are better at financial planning and more active in preparing for retirement than the average Canadian, according to the 22^nd Annual RBC RRSP Poll.

Over half of boomer business owners (54%) regularly review, update and keep their financial plan in mind when they are about to make key financial decisions, compared to 38% of Canadians in general.

Consequently, almost two-thirds (65%) are confident in the amount of their savings, compared to only 51% of Canadians who share the same belief that they’re meeting or ahead of their goals.

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“Due to their entrepreneurial mindset and the fact that they must take care of themselves financially in the future, retiring business owners and boomers see financial planning as a priority,” said Michael Feaver, senior manager of strategic initiatives at RBC.

He adds, “They do a better job of retirement planning and start investing at an earlier age, which gives them greater flexibility and control during their retirement years. Your business requires a strong grasp and long-term view of its finances, and your personal finances should be no different.”

The survey found retiring boomers, and especially aging business owners, are approaching retirement with a different set of financial priorities in mind compared to the average Canadian. Boomers are focusing on saving for retirement first while the general population is mainly focusing on reducing household debt.

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Reducing debt is a good move, however, with over half of Canadians (58%) currently retiring with excessive debt, according to a PwC study. Younger generations do indeed need to learn to build investment portfolios and seriously consider retirement from Boomers, as RBC suggests, but shouldn’t lose sight of debt reduction goals. Retiring comfortably requires a careful look at your assets and liabilities, which a professional can help you do.

“Retiring boomer business owners are more self-reliant and have invested time and money in preparing for retirement,” said Jason Round, head of financial planning support for RBC Financial Planning. “Canadians spend an average of 20 years in retirement and it’s crucial they understand what it takes to live comfortably—a financial planner can help get you on the right track and address the retirement challenges.”

Round notes that business owners are more prepared for complex planning since they face additional related complexities, such as deciding whether to incorporate or operate as a sole proprietorship and how best to draw money from the business. They determine whether holding companies, individual pension plans and trust options will be appropriate for their business and develop a succession plan to ensure they have an effective exit strategy for all situations.

Boomers, retiring business owners and the rest of Canadians all have one thing in common though; every group have increased the estimated amount of money they will need to retire. Boomers have increased their estimate by 16% to $1.1 million since 2010, and Canadians in general have increased theirs by 20% to $601,000 since 2010.

The survey also found that more than half (56%) of retiring business owners are likely to work part-time during retirement to ensure they don’t outlive their savings, compared to 43% of Canadians in general.

Business owners have more control over when to retire (74%), compared to the 50% of Canadians who feel they have a choice. This may be due to the fact that only half of Canadians have a plan in place, with only 47% having it written down and only 21% using spreadsheets or databases to track their wealth. In addition, less than 45% of these Canadians seek financial advice to help develop their plans.

Read: Gen Xers getting squeezed by Boomers

The survey was conducted by Ipsos Reid and included approximately 4,000 adults, with a random sample of 1,224 adults in the general population and 2,911 Boomers with household financial assets of $100,000 or more.