Generation X, the segment of the Canadian population between the ages of 30 and 44, may be finding its financial way according to new research by Investors Group.

Results of a new poll probing the Gen X retirement mindset revealed a majority (58%) have a clear vision for their retirement life and what they will be doing with their time. This compares favourably with the findings of an earlier retirement survey by Investors Group, which found that two-thirds of their Boomer aged parents (66%) say they have a clear retirement vision. Echoing the sentiment of their elders, 60% of Gen Xers think that retirement will be an exciting stage of their lives.

The two generations also display similar approaches to saving and investing for retirement. Sixty-one per cent of Gen Xers have RRSPs and of those, 85% plan to contribute the same or more in the upcoming tax year. This compares to 62% of Boomers who have RRSPs, 79% of whom who will be contributing the same or more to their RRSPs. TFSAs are equally popular for both generations as well. Four out of 10 (39%) Gen Xers have opened TFSAs, almost the same as 43% of Boomers who have.

“Gen X and Boomers may have some differences, but it appears the apple doesn’t fall far from the tree in financial planning,” says Debbie Ammeter, Vice President, Advanced Financial Planning of Investors Group. “Gen Xers share remarkably similar dreams and hopes especially when it comes to their vision of retirement and how they are going to get there.”

Cruising together?

According to the research, Gen Xers plan to spend much of their retirement years enjoying the same activities as their parents. Like Boomers, travel scores highest on the list of retirement pleasures for Gen X (68%) along with no work pressures (58%). Boomers rank travel and no work pressures at 61% and 58% respectively.

Taking extended life expectancies into consideration, Gen X may be able to enjoy some retirement time together with their Boomer parents — if Mom and Dad agree. Surprisingly, spending time with family (57%) rates higher as a retirement pastime for Gen Xers than it does for Boomers (46%).

The concept of ‘working retirement’, pioneered by Boomers, also appears to be taking hold in the next generation. Four out of 10 Gen Xers as well as Boomers expect to gradually retire by working fewer hours from their current employer.

“It may be that Boomers have fundamentally changed the way retirement is viewed and the kids are following in their footsteps,” says Ammeter of Investors Group. “But it is also possible that the Gen X retirement lifestyle vision could change as this demographic cohort continues to age.”

Practical realities

According to Investors Group’s research, a majority (62%) of Gen Xers believe they will have to fund their own retirement. Half (51%) expect to fund their own medical and personal care. Boomers have very similar views with 60% saying they will have to fund their retirement and 56% expecting to pay for their own care.

When compared to Boomers, Gen Xers recognize that government pensions might not play as large a role in their retirement income (25% and 20% respectively) and see RRSPs as a more important income source (21% versus 16%). Only 3% expect inheritance to be a primary source of retirement income.

Fifty-four per cent of Gen Xers follow a spending budget while four of 10 (39%) work with a financial advisor to help them make investing and saving decisions.

“Given the financial challenges confronting them, including uncertain economic times, it’s notable that many are not putting financial planning on the back burner,” says Ammeter. “But there’s certainly room for improvement.”

Among Gen X RRSP contributors, 43% plan to invest in the stock market via mutual funds while 28% say they plan to put it in GICS, governments or money market investments. Twenty per cent are not sure where they plan to invest their money.

The Harris/Decima Poll was conducted online within Canada between Oct. 28 and Nov. 9, 2010 among 2,031 adults (aged 18 and over).

IE